The recent surge in Bitcoin’s price to around $38,000, which is the highest level since early May 2022, can be attributed to several factors based on different sources:
Spot ETF Speculations
There’s a buzz around the potential approval of a spot Bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC), which has led to increased optimism among investors. Bloomberg analysts have highlighted that the SEC might approve some of the pending spot ETF applications before January 10, 2024, which has fueled this speculation.
Whale Activities
There has been a notable increase in activities by Bitcoin whales, suggesting market optimism. Significant purchases by large holders have been observed, such as a whale reportedly buying $15 million of BTC every three hours. Such activity suggests anticipation of positive developments on the ETF front.
Short Squeeze
A significant short squeeze occurred, with approximately $51 million in BTC short positions being liquidated in one day. This is a situation where investors who have bet against the price of Bitcoin are forced to buy back into the market to cover their positions as the price rises, leading to a rapid increase in price.
Supply Dynamics
The supply of Bitcoin on exchanges has been decreasing, reaching a six-year low at the end of October. On-chain data shows a significant portion of the Bitcoin supply is held by long-term holders, which can constrain supply and contribute to upward price pressures.
U.S. Market Dynamics
Present data or commentary on how U.S. buyers have been particularly influential in the current rally, supporting the uptrend during U.S. trading hours. Insights from on-chain analytics suggest that U.S. buyers are sustaining the rally. There’s also been a shift in derivatives composition, indicating a change in trader sentiment, with some exchanges showing more long interest, which could support the price increase.