On Saturday, Bitcoin reached a high of $20.9k, losing money for short sellers who had bet against its rise.
The market’s leading cryptocurrency has been rising all week as a result of recent encouraging macroeconomic reports that have revived the generally stagnant market.
The price of bitcoin hasn’t been this high since early November, just before the shocking collapse of FTX, according to data from CoinGecko.
Indicating that the market is also showing signs of life, the total market capitalization of the cryptocurrency industry currently stands at $990 billion, an increase of more than 4% from the day before.
More than $80 billion worth of cryptocurrencies were exchanged the day before.
The S&P 500 increased by more than 2% as Q4 earnings season began and U.S. inflation numbers—while still high—kept falling. Traditional markets also saw gains for the week. The optimism has been boosted by the first monthly decrease in inflation in 2.5 years as well as more significant annual declines in both the headline and core readings.
Why the increase
In anticipation of the release of the Federal Reserve’s December Consumer Price Index report, bitcoin prices started to rise earlier in the week.
The week’s trading for bitcoin began on Monday, and since then, its price has risen. The CPI report confirmed that, in line with market expectations, inflation in the US economy is in fact declining.
All of this does not, however, guarantee that this year will be advantageous for risky assets, but it does suggest that things will look much more normal than they did last year.
Although the macroeconomic climate may have improved, the future is still gloomy for bitcoin businesses.
A New York-based organization called Metropolitan Commercial Bank (MCB) announced on January 9 that it would close its crypto-assets division, citing recent market losses and changes to the legal landscape as justifications. Customers working in the cryptocurrency sector contributed 6% of the bank’s total deposits.
Derivatives analytics show little sign of demand from leveraged short sales or defensive put options, despite Bitcoin rising 16% since the start of 2023.
Bulls can rejoice that the $900 billion total market capitalization resistance met no resistance, but bears are still patiently waiting for an entry point for their short positions.
However, given the market’s unfavorable newsflow, Crypto Bulls’ main hope is still a strong macroeconomic environment, which largely depends on how U.S. retail sales statistics are released next week.
About 12,621 traders were liquidated that day, for a total liquidation value of $650.99 million. Huobi received the largest single liquidation order, worth $6.84 million.
- Why Shortsell? The goal of shorting bitcoin is to borrow the asset when the price is high and then sell subsequently.
- They then buy back if the asset falls and return to who they borrowed from.
- The spread is then pocketed as profit by the short seller.
On January 12, Gemini and cryptocurrency exchange Genesis Global Capital was charged by the U.S. Securities and Exchange Commission (SEC) with selling unregistered securities through Gemini’s “Earn” program.
The final blow was a new round of staff layoffs announced by Crypto.com on January 13 that led to a 20% decrease in the global workforce. Other cryptocurrency exchanges have recently announced job losses, including Huobi, Kraken, and Coinbase.
