The Bitcoin price trajectory has once again taken a sharp upward turn, marking its ascent past the $28,000 landmark for the first time since its notable surge on August 29. This prior leap had been attributed to Grayscale’s triumph over the US Securities and Exchange Commission (SEC) in their legal battle regarding the Bitcoin Trust (GBTC) conversion to a spot ETF.
In a striking demonstration of Bitcoin’s infamous volatility, the BTC experienced a price escalation of over $800 within a minuscule 5-minute window on Sunday evening, rocketing from $27,250 to a peak of $28,053 between 6:15 and 6:20 pm ET.
Why Is Bitcoin Price Up Today?
One primary catalyst behind this dramatic price movement, as pinpointed by the esteemed crypto analyst Byzantine General, is the phenomenon known as a “short squeeze.” In the realm of futures trading, a short squeeze is characterized by a rapid price increase, forcing traders who had bet against the asset’s price (short sellers) to buy it to prevent further losses. This reactive buying can intensify the asset’s price jump.
During yesterday’s surge, a staggering $392 million in Bitcoin short positions, or about 7.7% of the total open interest in the market, were swiftly liquidated. Byzantine General further elaborated on the market’s resilience, observing that the Bitcoin open interest bounced back swiftly with an increment of $350 million, humorously suggesting the market’s willingness to embrace such a volatile maneuver again: “The whole market was actually like ‘I’ll fucking do it again.”
Crypto analyst Fabian D. deepened the analysis by pointing out the intricate interplay between short sellers being ousted and the potential for further Bitcoin appreciation. He indicated that the upward trajectory of Bitcoin from this point hinges on two primary factors: the entry of spot buyers driven by the fear of missing out (FOMO) and whether short sellers decide to re-establish their positions.
Fabian also alluded to the absence of institutional buying activity in the week preceding this surge but underscored the importance of monitoring premium rates on platforms like Coinbase and CME upon market opening today. Adding to the complexity of the market landscape, Fabian flagged two impending events: the anticipation surrounding the Ethereum Future ETF inflows, and the court hearing concerning the Celsius platform, which might…
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