Bitcoin price is up today, and a marketwide rally in crypto prices suggests that Bitcoin and Ether could be aiming to wrap up the month of October in the black.
As of Oct. 26, most major cryptocurrencies are posting single-digit gains. Bitcoin recorded a 5.15% price increase over the previous 24 hours and a 5.48% gain over the previous seven days. While the current price is fluctuating, BTC is holding above the psychologically important $20,000 level. The following chart shows the BTC rally since Oct. 24.
Stocks are beginning the day down as Bitcoin continues to remain over $20,000. Bitcoin’s momentum has continued for three days now and is seeing green candles on Oct. 26. The recent price spike pushed the total cryptocurrency market capitalization above the $1 trillion mark and comes after months of Bitcoin trading in a narrow sideways range of $18,000 to $20,000.
Hand in hand with Bitcoin’s growth, most major cryptocurrencies have registered price increases of more than 10% over the last 48 hours. There are several reasons for the crypto rally.
The current rally in BTC and other major cryptocurrencies may indicate an increase in confidence in the market following several key developments. Here are the key drivers of the growth.
$1 billion in short positions were liquidated
Since Bitcoin’s price crashed to $17,600 on June 18, the open interest of BTC futures contracts has been surging. The current price move triggered a wave of liquidations, and one data point to keep an eye on is if we see a sharp reduction in aggregate open interest.
Data shows that Bitcoin short liquidations accounted for $550 million over the past 24 hours. $704 million in cross-crypto shorts were liquidated on Oct. 25, with the Oct. 26 tally so far standing at $275 million.
Short liquidations directly help push the price of Bitcoin higher by forcing automated buy pressure. The current rally is seeing open interest gaining momentum after remaining consistent since October, which explains much of the sideways trading as well as the current rally.
Macro movements are starting to turn in Bitcoin’s favour
Investors’ confidence in the crypto market could also be rising due to their belief that the United States Federal Reserve could roll out smaller-sized interest rate hikes in the next two months. According to MacroMicro, a firm that publishes investors’ consensus estimates on expected changes in interest rates, interest rates may be lower than previously anticipated in the near future.
The graph points to a possible slowdown in interest rate hikes. The public sentiment shows that future rates may fall, and investors believe that this has created the possibility for a broad crypto market recovery.
The S&P 500 provides a general overview of the economy in general. Currently, Bitcoin and the S&P 500 share a high correlation coefficient.
Therefore, if interest rates ease and the economy grows, Bitcoin could continue to rally if a similar turn-around takes place in equities markets. The better the macro climate, the better for Bitcoin price.
Stocks stage a multiday rally, and the U.K. gets a crypto-friendly leader
The selection of Rishi Sunak as the new prime minister of the United Kingdom appears to have boosted crypto investor sentiment. Sunak is a crypto advocate and once commissioned a royal nonfungible token (NFT). As a result, many expect him to make major reforms in the crypto sector.
During his tenure as finance minister under the leadership of Boris Johnson, Sunak indicated his willingness to make the U.K. a cryptocurrency hub.
In April 2022, Sunak said:
“It’s my ambition to make the UK a global hub for crypto asset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country.”
It is still too early to determine whether or not the Oct. 26 rally is a sign of a trend change, but one thing is clear: Factors impacting Bitcoin price and the crypto market are clearly being driven by the forced unwinding of futures contracts, positive movement in macro markets, and investors’ expectation that central bank policy and crypto regulatory frameworks will improve.
Source: Cointelegraph
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