Crypto analyst says US Dollar Index is about to end its parabolic rally, predicts massive short squeeze for Bitcoin
A closely watched crypto analyst is predicting an epic short squeeze for Bitcoin (BTC) as he believes the US Dollar Index (DXY) is losing momentum.
Crypto strategist Kevin Svenson tells his 116,200 Twitter followers that DXY appears to be finally ending its parabolic ascent.
“DXY is about to break below the parabola folks. If it does, a big BTC rally is likely to happen.”
Traders are closely watching the performance of the DXY as a falling index indicates that deep-pocketed investors are moving their capital away from the safety of the US dollar and allocating to risk assets such as crypto and stocks.
Looking at the analyst’s chart, DXY’s parabolic rally started in February this year. Since then, Bitcoin has lost nearly 60% of its value after nosediving from $45,000 to its current value of $19,259.
At the time of writing, DXY is trading at 112 points, which still rests above Svenson’s support area.
According to the cryptoanalyst, BTC’s inability to assemble a significant rally is due to the continued strength of the DXY.
“The next piece of the puzzle for this rally to continue is DXY. Today it has gone up a bit, so BTC stalled. Market participants are most likely waiting for further moves from the US dollar index.”
But Svensson thinking that when DXY’s parabolic rally finally comes to an end, Bitcoin could initiate a massive short squeeze in just one day.
“If we bounce here, it’s going to crush a lot of short positions and probably generate +20% god candles.
Never doubt BTC’s ability to move like this.”
A short squeeze occurs when traders who borrow units of an asset at a certain price in hopes of selling them at a lower price to pocket the difference are forced to buy assets back when the trade moves against their bias.
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Featured image: Shutterstock/Tithi Luadthong
