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▲ Bitcoin (BTC)/AI Generated Image ©
The recent surge in Bitcoin (BTC) that heated up the virtual asset market turned out to be a thoroughly calculated fake bull market, that is, a sophisticated trap created by a short squeeze (buying pressure to liquidate or cover short positions).
According to Bitcoinist, a cryptocurrency media outlet, on May 21 (local time), the reason Bitcoin gave up the $80,000 level and faced selling pressure was clearly revealed through the latest report by CryptoQuant, a virtual asset on-chain data analytics firm. According to the media report, the driving force that pushed Bitcoin near $82,000 recently was not healthy spot demand in the market, but rather a mechanical rebound in the derivatives market, where short sellers who bet on a decline were forced to buy back their positions. Such a short squeeze-driven rally loses momentum once the forced buying pressure runs out, and currently, with new capital inflows into the spot market halted and futures demand plummeting, the upward momentum has been completely exhausted.
The report recalled the historical fact that whenever Bitcoin's total demand indicator, combining spot and futures markets, fell into negative territory during past bear market cycles, it was followed by further sharp declines or prolonged sideways trading. Currently, Bitcoin's total demand has already fallen below this critical threshold, and the external macroeconomic environment is also acting as a negative factor. With rising government bond yields in major countries tightening financial conditions, the flow of capital into risky assets has dried up, and sensitive selling pressure from institutional and individual investors is concentrated, particularly on major US-based exchanges, making demand recovery even more difficult.
From a technical perspective, the short-term structure appears very fragile. Bitcoin, having lost momentum below its short-term high of $82,000, is currently barely holding at the $77,000 level, testing a key support zone. On the daily chart, Bitcoin retreated after failing to break above the 200-day Exponential Moving Average (EMA) resistance near $81,000, and is now engaged in a struggle, having fallen to the 200-day Simple Moving Average (SMA) near $75,000 and the previous breakout zone between $73,000 and $74,000, which acted as resistance in March and April.
However, experts note that the trading volume observed during this decline has not significantly expanded to the level of panic selling (capitulation phase) seen in February. This suggests that the current downward movement is not a fear-driven crash leading to a complete collapse, but rather a technical retracement following a rally, indicating a healthy correction. While a mechanical short-term technical rebound due to oversold conditions can occur at any time, it is diagnosed that it will be difficult to completely remove structural downward pressure unless the total demand indicator significantly rises back above the zero line.
Consequently, Bitcoin is caught between heavy technical resistance overhead and structural support levels below. Whether the bulls (buying forces) can defend the key support zone of $73,000 to $75,000 and regroup will be crucial for the future direction. If even this last line of defense is given up to the bears (selling forces), the next major support level could be significantly pushed down to around $65,000, the accumulation zone from last February, requiring thorough risk management from investors.
*Disclaimer: This article is for investment reference only and does not take responsibility for investment losses based on it. The content should be interpreted for informational purposes only.*
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