The cryptocurrency market has been extremely volatile in the last 48 hours, but it appears like the bulls have won this time.
The price of Bitcoin has risen above $41000 for the first time since January 21st, while the price of Ethereum has risen past $3000, putting the entire market in the green.
A lot of factors contributed to the cryptocurrency market’s overall optimistic rise following the market’s fearful mood, which eventually led in a massive sell-off.
- Stock market rebound
- Short squeeze
- Market reversal was imminent
The stock market has rebounded after a massive sell-off
Bitcoin’s 11 percent plus gain on Friday was the highest single-day gain since mid-June, and the first substantial rebound after weeks of being roiled, along with technology and growth sectors, by fears of faster-than-expected Fed rate hikes to tame inflation.
It coincided with a rise in US markets, with the tech-rich Nasdaq completing the week with gains despite the high volatility from earnings, which included Amazon’s strong growth and Meta Platforms’ poor results.
Those synchronized changes demonstrated how Bitcoin has evolved into a mainstream asset, shaken by risk appetite swings.
On Friday, the recovery in stocks boosted other listed crypto assets, such as SOL, LUNA, AVAX, FTM, and BNB, which all rallied with Bitcoin.
The significant amount of short interest that had been opened in the $30,000 range, forcing bears to close their positions, was one of the reasons for the severity of the move.
Bitcoin shorts liquidations began in a cascade as soon as the price of Bitcoin began to rise.
Short squeeze is when several investors who have bet that a stock or an asset will collapse all try to liquidate their positions at the same time. This race frequently results in a surge in the financial asset demand and prices.
A market reversal was on the horizon
Bitcoin’s price has been in a tremendous slump for the past few months, and there haven’t been any substantial positive structural changes in that time.
A reversal is usually expected when the market moves aggressively in one direction (up or down) because nothing moves in a straight line.
After breaking the trend before the price, the Relative Strength Index (RSI) predicted a Bitcoin breakout, with Bitcoin steadily exiting the oversold area.
It’s uncertain which way Bitcoin will go, but it’s beginning to appear like the “bore” market is over and the bull market is back in full force. However, Bitcoin must be established above the crucial level of $41,000 in order to restore market trust; else, this could be a ruse.
At the time of writing, Bitcoin was trading hands for $41,700. The number one cryptocurrency in terms of market capitalization now has a market capitalization of $786 million.