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The price of Bitcoin (BTC) surpassed $ 24,000 on December 19, setting a new record. On Coinbase, BTC peaked at $ 24,200 and has since consolidated in the $ 23,500 to $ 23,800 range.

Three factors quickly pushed the price of BTC up and led to a record high. The factors are a large short squeeze, stacked sell orders at $ 23,600, and the market’s response to the US Treasury’s proposal for a self-preserved wallet.

Another massive short squeeze takes place at $ 23,600

According to data from Bybt.com, $ 138 million worth of short contracts have been liquidated today.

The massive liquidation of short contracts occurred just as Bitcoin surpassed USD 23,600. The USD 23,600 area was a key resistance level due to stacked sell orders on major exchanges.

Bitcoin exchanges liquidation data. Source: Bybt.com

On Bitfinex, the USD 23,600 and USD 23,800 resistance levels had major sell orders before the rally took place. As the Bitcoin price started to climb, shorts and sellers were squeezed out in the $ 23,600 to $ 23,800 resistance range.

Typically, a short squeeze occurs when a seller is forced to buy their position in the market because the price of Bitcoin is rising. This causes the demand from the buyers to rise sharply in a short period of time, often leading to a large breakout upwards.

The market is unaffected by the US FinCEN rule

On December 19, US Secretary of the Treasury Steven Mnuchin unveiled a rule proposal regarding self-preserved wallets.

The rule requires exchanges to track withdrawals and deposits in excess of $ 3,000 that come from non-custodial wallets. If the transactions exceed $ 10,000, exchanges should report directly to the Financial Crimes Enforcement Network (FinCEN).

However, as analysts explained, the rule itself isn’t as bad as the industry executives initially thought. CoinTelegraph reported that unless the proposal becomes law, the Bitcoin price and the wider crypto market would likely ignore the news.

Jake Chervinsky, general counsel at Compound Finance, said:

Let’s look on the bright side for a moment. This does not require KYC for any non-custodial portfolio transaction. It is not an outright prohibition on self-custody. It does not prohibit the use of a network without permission. It really – REALLY – could have been a lot worse. “

However, despite the positive catalysts, traders believe that Bitcoin could consolidate or withdraw in the short term due to the rally’s over-expansion.

Scott Melker, a cryptocurrency trader, pointed to Bitcoin’s Relative Strength Index (RSI) on the 4-hour chart to suggest that overbought bear divergences are likely to occur. He said:

“My $ BTC long closed with leverage. Bear divs bought over are likely, not guaranteed. But if I get the chance I would like to come back for a long time. Especially a retest of the old all time as support. “