Bitcoin has officially broken out above the $8,000 level of resistance with a stunning 7.86% rally over the past 24-hours.
At the time of writing the world’s largest cryptocurrency is trading at around $8,350 with a potential upside price target emerging at $8,830.
A grand total of $55 million in short positions have now been liquidated on derivatives exchange BitMEX, according DataMish.
Bitcoin is now trading back above the daily 200 moving average for the first time since early March to indicate a clear shift in sentiment and optimism leading up to the block reward halving.
With the halving being less than two weeks away traders are clearly attempting to enter the market before supply is suppressed.
The halving will see rewards for miners slashed from 12.5BTC per block to 6.25BTC per block in an event that has historically been very bullish for Bitcoin and all cryptocurrencies.
The previous halving commenced in 2016 and what followed was the most extreme bull market witnessed in decades, with Bitcoin surging to $20,000 while the likes of Ethereum rose from under $10 to $1,400.
In order for Bitcoin to continue rallying to the $8,830 target it needs to close this evening’s daily candle above the daily 200MA and the $8,200 level of support.
However, with the sheer amount of short positions still open on margin exchanges Bitcoin could well experience a short squeeze, which could see price leapfrog the $8,830 level before testing $9,050.
If in the rare event Bitcoin suffers a correction before this evening’s daily candle close, it will likely re-test the $7,800 level which is now a level of support after being a point of resistance over the past week.
From a macro perspective the next key test for Bitcoin will be the diagonal trendline dating back to the 2017 all-time high of $20,000, with it currently coming in at around $9,650.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.