In a surprising move, Bitcoin, the largest cryptocurrency by market capitalization, jumped as high as $26,321 in today’s trading session, reversing the prior day’s decline to three-month lows of $24,900.
The move remains surprising, as Bitcoin has just formed a bearish death cross pattern on its daily chart. A death cross pattern occurs when the moving average MA 50 crosses below the moving average 200 and, in theory, implies a further sell-off.
Crypto expert Benjamen Cowen posted about the surprising rebound: “Looks like BTC is getting its typical death cross rally.”
The reason for the price surge remains an unexpected short squeeze, a rapid increase in the price owing primarily to excessive short selling rather than underlying fundamentals.
Bitcoin’s move above $26,000 liquidated $66.45 million of short positions in the past 24 hours. The price rise also triggered a drop in open interest in futures and perpetual swap trading on Binance, Bybit, OKX and Deribit.
At the time of writing, Bitcoin was up 3.09% in the last 24 hours to $26,209.
This week, the United States will release August CPI and PPI figures, while the European Central Bank will announce its interest rate decision.
Economists predict that the U.S. Consumer Price Index (CPI) will have risen 0.6% in August, more than double the 0.2% increase seen in July. The CPI is expected to have increased at a pace of 3.6% year over year, compared to 3.2% in July.
While the Fed is set to leave its benchmark federal funds rate constant at its policy meeting later this month, market hopes that the central bank could contemplate reducing rates soon seem to be fading due to the economy’s and inflation’s continued persistence.