Bitcoins Short Squeeze to $112K – Possible if US Shutdown ends

Takeaways from the conference:

• The US shutdown resolution may spark a brief squeeze. However, traders are skeptical about whether it can alone sustain Bitcoin’s rise beyond $112,000.

• Investors are becoming more cautious as AI and consumer earnings continue to weigh down on their risk appetite. This has a negative impact on Bitcoin’s potential rally.

BitcoinBTC( ) recovered the $106,000 mark on Monday, as it appeared that the US shutdown was nearing its end. Analysts warned of the potential impact that a prolonged funding stop could have on consumer spending, particularly after thousands flights had been canceled. Cryptocurrency market grew along with tech-heavy Nasdaq.

Now traders are evaluating whether Bitcoin’s most recent gains can be sustained amid weak demand on bullish BTC derivatives.

BTC two-month futures trade today at a premium of 4% over the spot market, below the neutral threshold of 5%. This lack of interest in leveraged positions is likely due to the forced liquidations worth $270 million that took place between Tuesday and Thursday, when Bitcoin dropped below $107,000. The market may not be reopened until buyers have more confirmation of the recession.

US Federal Aviation Administration was forced to reduce domestic operations. Airlines have cancelled more than 5, 000 flights. according Yahoo Finance. Some air traffic controllers who were not paid for almost a month have stopped showing up for work. There was no guarantee that the dispute would be resolved, despite Sunday’s special session of the US Senate. The breakthrough is in sight government shutdown Bitcoin investors are likely to be more optimistic.

US Supreme Court questions President Donald Trump’s authority in setting import tariffs. Both the length of the shutdown as well as its sustainability are uncertain. additional import tariffs Adds an additional layer of risk. 

Bitcoin reflects broader concerns about US economy

The short-term effects of the Bitcoin phenomenon are unclear. However, their overall impact has supported the fiscal budget to date by delaying expenses and increasing revenue. Bitcoin remains vulnerable to market fears about the US economic situation.

You can also find out more about the following: BTC options The skew, or put-call spread (price difference between the two), fell to just 6% Monday. It was the first decline since November that marked the transition from a bullish-to-neutral market. As put options (sell them) are traded at higher premiums, this metric can jump to as much as 10% when traders predict a sudden correction. The current set-up clearly indicates skepticism.

Due to the fact that they are perpetual, contracts for BTC remain more closely tied to Bitcoin spot prices than monthly BTC Futures. adjustable funding rate. Since these contracts are preferred by retail traders, it is important to evaluate whether sentiments have improved since Bitcoin’s recent test of $106,000.

The funding rate under balanced conditions should fall between 6% to 12%, reflecting both the risk and the opportunity cost. This 5% funding rate shows a lack of retail interest, even though Bitcoin reached the support level $100,000 on Friday. This absence of interest in leveraged bullish position should not be misinterpreted as a bearish outlook.

Related: End to US gov’t shutdown sparks institutional buying, ETF ‘floodgate’ hopes

Fears excessive valuations Investors have become risk-averse due to the weakness of corporate earnings that are geared towards consumers and in artificial intelligence. It is possible that the end of government shutdown will ease tensions. This could push Bitcoin to $112,000 or even higher, possibly triggering short squeeze. It seems overly ambitious to bet on a bullish breakdown based solely upon the end of the shutdown.

This article was written for general informational purposes only and does not constitute legal or investment advice. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.