Bitcoin’s next move hinges on spot buying, says Charles Schwab's Jim Ferraioli
Bitcoin may need a new source of buying to extend its rally after $6.4 billion in leveraged short perpetual futures positions were liquidated since Wednesday, according to Charles Schwab’s Jim Ferraioli.
“Ultimately, short squeezes tend to be short lived, but this could settle the debate as to whether the bottom is in,” said Ferraioli, head of crypto research and strategy.
One place to watch next is the futures market. Bitcoin futures are now in backwardation, a relatively rare setup where futures prices sit below spot. Ferraioli said hedge funds that appear bullish because they are net long futures may instead be repositioning basis trades rather than betting on bitcoin’s direction.
That could change if the futures curve returns to contango, its more common state.
As cash-and-carry traders unwind positions that are currently long futures and short spot, they would need to buy bitcoin in the spot market, which could help support bitcoin after the short squeeze fades.
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Read original ↗Disclaimer: This article is for information only and does not constitute investment advice. Digital assets involve substantial risk.
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