Bitcoin price has surged past the $71,000 mark. In the last 24 hours alone, Bitcoin’s price rose 6.5%, from just under $65,500 to $71,491. This remarkable rally can be attributed to a combination of factors that have collectively contributed to the upward trajectory of the world’s leading cryptocurrency. Here we take a closer look at the four main reasons behind Bitcoin’s latest price surge.
#1 Influence on the futures market
The futures market has played a crucial role in driving up the price of Bitcoin. According to facts from Coinglass have seen the liquidation of 64,480 traders in the last 24 hours, with a total crypto liquidation of $184 million. For Bitcoin specifically, shorts worth $56.9 million and longs worth $16 million were liquidated.
Byzantine general, a crypto analyst, noted the significant increase in open interest, indicating that leverage has been a major factor driving Bitcoin’s price higher. He said: “I can’t help but feel like BTC is trading like someone knows something. A billion dollars in open interest has been added in the last few hours. I think it is mainly this influence that has taken us to a higher level.”
Furkan Yildirim, another analyst, warned on the sustainability of this rally, pointing to the more than $1.7 billion in open interest accrued since yesterday as a sign of over-indebtedness. “The whole truth is that over $1.7 billion in open interest has accrued since yesterday. We are increasingly seeing the use of over-leveraged positions,” he noted, raising questions about the sustainability of this move.
#2 Bullish news for Bitcoin
The rally was further driven by a series of optimistic news. Notably, the London Stock Exchange (LSE) has announced its plan to introduce a market for Bitcoin (BTC) and Ether (ETH) exchange-traded notes (ETNs) by May 28. This decision opens the door for professional investors in Europe and signifies growing institutional acceptance.
In addition, the news from the Peruvian Nilam Resources express intention to buy 24,800 Bitcoins (worth $1.7 billion) “at a discounted rate compared to current market prices” through an acquisition strategy involving MindWave, a special purpose entity, has injected a dose of excitement and skepticism into the market , given Nilam’s microcap OTC stock status.
#3 Bitcoin ETFs and Coinbase Premium
Another critical factor that influenced Bitcoin’s price rise was the dynamics surrounding Bitcoin ETFs and the Coinbase premium. The Coinbase Premium Gap turned positive again yesterday, as observed by CryptoQuant analyst Maartunn, indicating robust demand for spot Bitcoin ETFs.
Guess who’s back? Bitcoin: Coinbase Premium Gap is positive again
https://t.co/0C7YyyFe2T pic.twitter.com/b73XbSygbl— Maartunn (@JA_Maartun) March 25, 2024
Given Coinbase’s control of approximately 90% of Bitcoin ETF assets, the premium emerges as a crucial indicator of institutional demand for Bitcoin. This was further evidenced by yesterday’s positive net ETF inflows of $15.4 million, after five consecutive days of net outflows last week.
Grayscale’s GBTC had outflows of $350 million. Meanwhile, Fidelity’s FBTC started to pick up the slack from last week with an inflow of $261.8 million. Blackrock had another weak day with only $35 million in inflows. Nevertheless, the Coinbase premium was again a good indicator.
Yesterday’s ETF flows were positive again after a negative week at $15.4 million.$GBTC There was an outflow of $350 million. Fidelity started to clear last week’s deficit with an inflow of $261.8 million.
Blackrock only made $35 million.The price has increased from $65,000 to over $70,000. One day… pic.twitter.com/HCNwa7L2p8
— WalvisPanda (@WalvisPanda) March 26, 2024
#4 Technical breakthrough
From a technical perspective, Bitcoin’s price breakout from a descending parallel trend channel on the 4-hour chart marked a crucial turning point. The successful retest of the strong resistance zone (red zone) has confirmed the legitimacy of the breakout, leading to an increase in the price of Bitcoin by more than 7%. This technical move has boosted the confidence of both traders and investors and contributed to the momentum that has pushed the price above the $70,000 threshold.
Featured image created with DALL·E, chart from TradingView.com
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