Short sellers who traded against Bitcoin’s rise lost money on Saturday when the cryptocurrency hit a high of $20,9k.
The leading cryptocurrency has been trending upwards this whole week as encouraging macroeconomic news revives a stagnant market.
The last time Bitcoin was this expensive was in early November, before the shocking collapse of FTX, according to data compiled by CoinGecko.
The total market worth of all cryptocurrencies is now $990 billion, up more than 4 percent from the day before. This is a positive indicator that the market is recovering.
More than $80 billion was exchanged in cryptocurrencies the day before.
As the fourth quarter earnings season began and U.S. inflation statistics (although still excessive) continued declining, traditional markets also witnessed gains for the week, with the S&P 500 increasing by more than 2%.
Optimism has been bolstered by the first monthly inflation decrease in 2.5 years, as well as by more significant yearly drops in both the headline and core readings.
The reasons for the increase are as follows
The rise in Bitcoin prices started earlier in the week as investors prepared for the publication of the December Consumer Price Index data from the Federal Reserve.
Bitcoin trading for the week started on a high note and has only gotten better since then.
The Consumer Price Index data showed that declining inflation in the US economy is in line with market predictions.
It’s still not a given that risk assets will do well this year, but the signs are better than they were this time last year.
Businesses that rely on Bitcoin face a dismal future even though the macroeconomic situation may have improved.
New York’s Metropolitan Commercial Bank (MCB) announced on January 9 that it will cease operations in the cryptocurrency assets industry because of recent market losses and regulatory shifts.
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Customers working in crypto provided the bank with 6% of its total deposits.
Derivatives analytics indicate no sign of demand from leveraged short sales or defensive put options despite Bitcoin’s 16% gain since the beginning of 2023.
Although bulls may be happy that the $900 billion total market capitalization hurdle was not met with any resistance, bears are still eagerly waiting for an entry moment for their short bets.
Despite the market’s bad newsflow, Crypto Bulls’ main hope is still a solid macroeconomic climate, which is mostly depending on how U.S. retail sales numbers come out next week.
On the same day, some 12,621 dealers were liquidated for a total of $650.99 million.
Huobi was the target of the largest liquidation order to date, totalling $6.84 million.
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What’s the Point of Shortselling?
Bitcoin shorting is borrowing the asset while its price is high to sell it for a profit later.
Then, if the value of the asset drops, they will purchase it back and give it back to the lender.
The short seller keeps the spread as extra money for their efforts.
On January 12, the U.S. Securities and Exchange Commission (SEC) charged Gemini and cryptocurrency exchange Genesis Global Capital for marketing unregistered securities via Gemini’s “Earn” program.
The death knell was sounded on January 13 when Crypto.com announced another wave of layoffs, resulting in a 20% decrease in the worldwide workforce.
Several cryptocurrency exchanges, including Kraken, Coinbase, and Huobi, have recently announced layoffs in the previous month.
