Over the past weekend, bitcoin (btc) saw a significant rally, pushing its price above $63,000, a 5.6% increase since hitting a low below $60,000 on Friday. This unexpected rise occurred despite a lack of major news, leading to speculation and analysis about the underlying causes. Here's a deep dive into three key factors that could explain this weekend's price action.
According to DeFi^2 (@DefiSquared), the number one trader at Bybit and a leading wallet at DeBank, a mysterious “whale” has been active in the Binance perpetual futures market. DeFi^2 x.com/DefiSquared/status/1807326724658753694″ target=”_blank” rel=”nofollow”>noted significant buying activity from this entity, stating: “Since btc's local lows on Friday, almost all of this weekend's bounce has come from a single entity on Binance Perps that has invested over $450 million in purchases in blocks of 500 btc at a time during the hours of lowest market liquidity.”
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DeFi^2 analysis sparked speculation about the whale's possible strategies, especially considering the impending distribution of Mt. Gox, which could further influence bitcoin's liquidity and price stability. He explained: “It's curious to know what the ending will be just before the start of the Mt Gox distribution. With a position this size, to exit they will have to run the market high enough to cause a small squeeze, or end up becoming a massive waterfall risk if the market goes against them.”
#2 Open Interest Accumulation
Cryptocurrency trader Daan crypto Trades (@DaanCrypto) provided insight into how the futures market contributed to bitcoin’s price movements. He focused on the ratio of open interest to market price, a critical indicator of market sentiment and potential future volatility.
“During this bullish period, we have mostly seen an increase in open interest with some relatively small short squeezes and some long-term profit-taking in between. I think there are a lot of underwater shorts from the ~$60,000 region that should be eliminated if the price were to continue to rise. That $65,000 region remains an important area to watch,” Daan said. x.com/DaanCrypto/status/1807662164934578290″ target=”_blank” rel=”nofollow”>wrote.
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Interestingly, open interest in bitcoin increased from $30.97 billion on Saturday to $32.21 billion on Monday, according to data from Coinglass. Despite this increase in open interest, no substantial short squeezes occurred over the weekend. The liquidation of just $35 million in btc short positions during this period was relatively modest compared to past events, such as on May 20, when the price increase from $66,000 to $71,500 resulted in $84.2 million in short liquidations.
Another contributing factor was likely a technical breakout of bitcoin, which changed the market momentum. Popular crypto analyst CRG (@MacroCRG) x.com/MacroCRG/status/1807549673709932867″ target=”_blank” rel=”nofollow”>described the weekend's price action as a “breakout beauty.” He noted that both funding rates and the perpetual futures basis remained stable, which typically precedes a strong market move.
“It is a beauty of rupture. The financing base + perps remains stable. The weekly close at 1H + the weekly candle is a huge pin bar with an 8% wick (high probability reversal candle). Complete shipping,” she stated.
Technical analysis shows bitcoin breaking out of a descending trend line that has been in place since peaking around $72,000 in early June. The breakout of this trend line on the Binance 4-hour chart, as noted by CRG, indicates a possible reversal of the recent downtrend.
Additionally, btc's weekly close presents a significant bullish signal (a large pinbar candle with an 8% wick) indicating upward movement potential.
At the time of writing, btc was trading at $63,232.
