The rapid surge in Bitcoin’s prices has taken short traders by surprise, resulting in approximately $90 million in liquidations on Tuesday alone, following $70 million in short liquidations on Monday. These leveraged short futures bets were aimed at profiting from a potential reversal in Bitcoin’s price.
The liquidations contributed to Bitcoin’s strength this week, propelling it from $39,000 to $44,000. Most of these liquidations occurred on major exchanges such as Binance, OKX, and Huobi. The surge in trading volumes by 25% in the past week and the growth in open interest from $17.2 billion to $20.2 billion since the start of December indicate heightened market activity.
Several factors are fueling Bitcoin’s growth, including optimism surrounding a potential spot exchange-traded fund (ETF) approval in the U.S., anticipation of rate cuts in the U.S. that favor risky assets like Bitcoin, and the possibility of sovereign adoption as leaders in major economies express a friendly stance towards Bitcoin.
In a notable move, a group of traders placed a $200 million Bitcoin futures position over the weekend, highlighting the substantial demand for Bitcoin exposure. The ongoing updates and changes in spot ETF applications contribute to the positive sentiment.
Julius de Kempenaer, Senior Technical Analyst, notes that the rally’s staging began in late October when Bitcoin surpassed the resistance in the $30,000 area. Looking ahead, the next expected resistance level on the weekly chart is around $48,000, the peak set at the end of March 2022. Overall, the trend for Bitcoin is upward, with a target around $48,000 and support near $38,000.
This information is not legal advice. Do your own research before making any decisions. Only invest what you can afford to lose and seek independent financial advice if needed. Understand the risks involved before purchasing any cryptoassets.