Bitcoin Sheds Middle East Risk..."If a Short Squeeze Explodes, It Will Go to $85,000"

▲ Bitcoin (BTC)/AI Generated Image ©

As pent-up geopolitical tensions in the Middle East dramatically ease, coupled with astronomical buying from major corporations and government liquidity injections, leading cryptocurrencies like Bitcoin (BTC) and XRP (Ripple) have begun an unstoppable storm rally, targeting the $85,000 mark.

According to investment media outlet TradingNews on April 22 (local time), Bitcoin surged 4.56% in a single day on Wednesday, soaring to $79,305, its highest level in 11 weeks. Ethereum (ETH) also broke past $2,404, and XRP rose to the $1.45 mark. This widespread bullish trend is primarily a result of the geopolitical uncertainties that had been weighing down the market being resolved, as U.S. President Donald Trump extended the ceasefire with Iran indefinitely and hinted at the possibility of easing the naval blockade in the Strait of Hormuz.

Another key driver behind the market's rise is Strategy's aggressive accumulation and macroeconomic liquidity injection. Strategy invested $2.5 billion, its largest weekly purchase since November 2024, to acquire 34,164 Bitcoins at an average price of $74,395, increasing its total holdings to 815,061. Furthermore, the U.S. Treasury plans to execute a $15 billion bond buyback, supplying massive liquidity to the financial system, and the expectation that this surplus capital will flow into high-risk assets is strongly supporting the rally.

Interestingly, prices are surging despite the fact that fund inflows into spot exchange-traded funds haven't been explosive. The media diagnosed that there is still abundant institutional capital waiting, and the uptrend could accelerate further once fund inflows become full-fledged. Additionally, an unusual situation is unfolding in the derivatives market, where the 30-day average funding rate has been negative for an astonishing 53 consecutive days, creating perfect conditions for a massive short squeeze (buying pressure that occurs to liquidate or cover short positions) to explode, forcing the liquidation of short sellers when prices rise.

The technical structure also points to a major uptrend. The Bollinger Bands, which are the narrowest ever on a monthly basis, and the Relative Strength Index (RSI) entering the oversold territory, precisely match the patterns seen at the beginning of past bull markets that led to hundreds of percent surges. In the short term, $78,250 is a critical watershed that will determine the uptrend, and if this support level is successfully defended and the psychological resistance of $80,000 is breached, it could go straight past the 200-day exponential moving average at $82,769 to $85,000 by the end of the month.

Currently, Bitcoin is proving its hybrid value as an alternative asset that defends against geopolitical crises, beyond just a risky asset, absorbing capital from both gold and tech stocks. Experts advised that at this juncture, where macroeconomic tailwinds, institutional accumulation, and technical bullish patterns are perfectly aligned, a short-term correction to the $76,000 range should be seen as a buying opportunity, and close attention should be paid to whether it breaks past $80,000.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*