Bitcoin‘s price has surged by 6% today, reaching new peaks and closing just below its all-time high at $71,137. This significant rise has broken the prolonged stagnation seen in recent weeks, turning altcoins green as well. The notable question now is, what lies ahead for Bitcoin?
Key Factors Behind Bitcoin’s Surge
Ethereum (ETH) is nearing the $3,800 mark, while Bitcoin (BTC) races towards new records. Investors, previously convinced of an imminent ETF rejection, are now puzzled by unexpected approval signals from the SEC. The SEC’s previous legal actions had indicated a likely rejection, making the current approval signals surprising.
The surge is not solely attributed to developments in the ETH ETF arena. Other influential factors include a decrease in exchange supply, a positive net flow for Spot Bitcoin ETFs, and macroeconomic trends. Notably, the turnaround in GBTC outflows, paired with substantial inflows, has contributed to Bitcoin’s stability and growth. The ETF market is also exhibiting stable growth due to reduced outflow requirements.
Impact of Bitcoin Liquidations
In futures trading, speculative investors often open leveraged short positions in anticipation of a price drop. However, if BTC unexpectedly rises, reaching the liquidation price, these positions are closed and liquidated. Over the past 24 hours, $264 million worth of short positions were liquidated, catching bearish investors off guard who expected a return to $59,000.
Should Bitcoin surpass $74,300 and establish a new all-time high, an estimated $1.4 billion worth of positions could be liquidated. This scenario would be damaging for bearish investors, potentially driving a short squeeze that could push Bitcoin prices near $80,000.
Key Inferences
- Investors should closely monitor SEC’s ETF decisions as they significantly impact market movements.
- Watch for changes in exchange supply and Spot Bitcoin ETF flows for market signals.
- Be aware of liquidation risks in leveraged short positions to avoid significant losses.
- Key political events, such as potential vetoes on crypto laws, can trigger market volatility.
This week brings two critical events: President Biden’s potential veto of the crypto law and another crypto law vote on Thursday. Any unexpected anti-crypto developments during these events could spark panic selling, especially in the absence of new supportive ETF news and pressure from speculative traders.