Bitcoin's Rally Hits Wall at $81K Amid Forced Short Covering
Bitcoin's recent rally hit a wall at around $81,000 on Tuesday, its strongest level in three months. The cryptocurrency slipped back towards $79,000 on Wednesday after reaching an intraday high of $81,265.
The rejection came after a rapid move fueled partly by forced short covering, which is expected to be short-lived according to Jim Ferraioli, Charles Schwab head of crypto research. Ferraioli noted that about $6.4 billion of leveraged short perpetual positions had been liquidated during the rally.
However, the durability of the rally now depends on whether institutional buying continues after forced liquidations have cleared, according to Ryan Lee, chief analyst at Bitget Research. There is evidence that genuine capital is supporting the rebound, with US spot Bitcoin ETFs attracting $337.56 million on Aug. 24.
CryptoQuant research head Julio Moreno remains constructive, saying 'basically all metrics are pointing to the initial phase of a new bull market.' However, Moreno identified another hurdle: Bitcoin still needs to move above its 365-day moving average near $83,000 for stronger confirmation.