Why is Bitcoin price up today?
As of October 26, 2022, most major cryptocurrencies are posting single-digit gains. Bitcoin recorded a 5.15% price increase within the last 24 hours and a 5.48% gain within the last 7 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 October 24, 2022.
Stocks are beginning the day down as Bitcoin continues to remain over $20,000. Bitcoin’s momentum has continued for 3 days now and is seeing green candles today. The recent price spike pushed Bitcoin’s total market capitalization above the $1T mark and comes after months of narrow sideways trading range of $18,000 and $20,000.
Hand in hand with Bitcoin’s growth, most major cryptocurrencies including Ethereum (ETH), Solana (SOL), Cardano (ADA), Polygon (MATIC), Ripple (XRP) and Tron (TRX) registered more than 10% price increases within 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 we give details of the key drivers of the growth
$1 billion in short positions were liquidated
Since Bitcoin 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 in liquidations in 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 Bitcoin price 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 favor
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, shows that interest rates may be lower than previously anticipated in the near future.
The graph points to a possible slow down in the 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 for 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 were to take place in equities markets. The better the macro climate, the better for Bitcoin price.
Related: Why is the crypto market up today?
Stocks stage a multi-day rally and the UK gets a crypto friendly leader
The selection of Rishi Sunak as the new UK prime minister appears to have boosted crypto investor sentiment. Sunak is a crypto advocate and once commissioned a royal NFT. As a result, the world expects him to make major reforms in the crypto sector.
During his tenure as the Finance Minister under the leadership of Boris Johnson, Sunak indicated his willingness to make the UK 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 October 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 potential crypto regulatory frameworks will improve.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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