Shorts will feel the pain if Bitcoin breaks through $25K

January 25, 2023

Bitcoin is up 40% in 2023 and is steadily approaching the $25,000 mark.

Opinions remain split about the asset's long-term trajectory, but current price action suggests that sentiment may be changing.

Last week, BTC broke above a lower high set on the weekly chart for the first time in over a year.

BTC breaks above $21.5K mark, a previous weekly lower high

The next weekly lower high set in 2022's bear market hovers around the $25,000 mark. Two things make this zone an important lookout spot for both long and short traders:

This is an area where stubborn, long-term shorts have likely placed their stops en masse.

A basic understanding of trends is necessary here. Trends are set via higher highs and higher lows in bull runs and lower highs and lower lows in bear runs. In the latter case, many traders place stops just above a high since, if the price reaches this level, it invalidates the idea that the asset is still trending.

2. This is an area where Bitcoin's 200-week moving average is
located.

This trend line has long served as a support and resistance zone, and Bitcoin has been hovering below it for the longest time since its inception.

As a result, if BTC reaches above $25K, shorts could be placed in a seriously threatening position, and a short-term short squeeze could ensue.

But it's not that simple...

Resistance is known for holding in long-term bearish trends. A failure to break over $25K could just push BTC back into a bear trend. In that case, a revisit of 2022's lows is not out of the question.

Whatever the case, $25K will likely be an important price mark for BTC, and traders should be on watch.

Read the full story here on Cointelegraph.

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Regards,

Russell DeCorte
Director
Markets Pro