October 26, 2023
In a resounding comeback, Bitcoin has catapulted above the $35,000 mark for the first time since May 2022, registering a surge of over 9% to reach $34,349.55, according to Coin Metrics. The digital currency made a remarkable late-night leap to a high of $35,113.29, marking its highest level in over a year. This rally signifies a staggering 110% increase from both the commencement of the year and its 2022 low.
This soaring trajectory is attributed, in part, to a phenomenon known as a “short squeeze,” wherein investors who had wagered against Bitcoin found themselves compelled to cover their short positions. Crypto data provider CoinGlass reported a substantial $275.45 million in short liquidations on Sunday, followed by an additional $100.44 million on Monday.
Ryan Rasmussen, an analyst at Bitwise Asset Management, pointed out that a substantial portion of this surge was propelled by the $167 million worth of short liquidations, predominantly on offshore exchanges. “I don’t think anyone expected the level of price action we’re seeing, and those investors who were shorting bitcoin in the $33,000 plus range are certainly feeling the pain of that surprise,” Rasmussen remarked.
Last week, the SEC opted not to challenge a pivotal court ruling in the Grayscale lawsuit, sparking optimism that a Bitcoin-related ETF might secure approval in the near future. This optimism gathered momentum as firms overseeing Bitcoin ETFs updated their filings, and prominent investors like Cathie Wood of Ark and Mike Novogratz of Galaxy emphasised a positive shift in the SEC’s stance towards the industry.
A Bitcoin ETF would offer investors a means to track Bitcoin’s price movements without necessitating direct ownership of the cryptocurrency. Given Bitcoin’s reputation for high volatility and unpredictable price fluctuations, this development could open new avenues for investment.
Major financial institutions including BlackRock, Invesco, Fidelity, and Grayscale have been advocating for Bitcoin ETFs, submitting applications to offer such assets. They position these ETFs as more secure investment options compared to direct cryptocurrency investments, which are known for their speculative nature and price volatility.
As Bitcoin continues its bullish run, market observers are keeping a watchful eye on how this surge might shape the future of cryptocurrency investment strategies.