Bitcoin prices spiked earlier today, pushing higher as the cryptocurrency benefited from several developments that could be seen as bullish.
The digital currency, which is the world’s largest in terms of market value, soared more than 6% in less than an hour, from $ 44,875.50 around 6 a.m. EDT to $ 47,650.40, CoinDesk data shows.
Some market watchers have indicated that a short squeeze triggered this strong rally.
Daniel Joe, whose Twitter profile describes him as both a technical analyst and author, posted a Tweeter illustrating how the rise in bitcoin prices coincided with several short contracts for the digital asset being liquidated.[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
He wrote “539 #BTC shorts liquidated in 1 minute by sending #Bitcoin to 47k.”
While more than one analyst indicated that a short squeeze was fueling bitcoin’s rise this morning, some experts were less convinced.
“As for the current rapid rise in BTC, that might be a short squeeze, but it’s hard to say for sure,” said Julius de Kempenaer, senior technical analyst at StockCharts.com.
“At the end of the day, no matter where the demand is coming from, there was / is a lot of buying activity and that pushes the price up.”
While de Kempenaer spoke about market dynamics, Marc Bernegger, member of the board of directors of Crypto Finance Group, took a different approach.
“The short squeeze was only partly responsible for today’s price movement and the main reason was that Federal Reserve Chairman Jerome Powell said the United States had failed no intention of banning cryptocurrencies, ”he said.
Brett Sifling, Investment Advisor for Gerber Kawasaki Wealth and Investment Management, also weighed.
“I don’t know what the short float looks like on Bitcoin, but I can’t imagine this had a big impact on the rally,” he said.
“I think the rally is because Jerome Powell and Gary Gensler gave some positive feedback yesterday,” Sifling added.
“Jerome suggested the central bank wouldn’t ban crypto like China did. Gary mentioned the support for an ETF based on bitcoin futures.
“These comments, along with the debt ceiling / government shutdown / infrastructure bill / inflation worries mess in the US, sets in during a favorable time for BTC.”
Charlie Silver, CEO and Chairman of Permission.io, also commented on key government developments, most notably those involving the potential to get rid of the US federal government’s limit on its debt.
“One of the main factors behind the positive rise in BTC is all the talk in Washington about removing the debt ceiling,” he said.
“Even though the debt ceiling has no real substance, at least every two years Congress and the President face the public on the need to continually increase federal debt,” Silver said.
“The only way the federal government can deal with the increase in debt is for the Fed to buy federal bonds. In other words, increase the speed of the printing press.
“Crypto is a response to the irresponsible management of the Fiat currency and we see all of this on the screen,” he concluded.
Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, and EOS.
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