Bitcoin has been through fire and back, as it faced price volatility amid the recent crypto market crash. BTC traded 15.98% away from its all -time high of $73,750.07 threatening to nosedive below $60,000. This decline was partly fueled by the escalating geopolitical factors in the Middle East. The downturn trend was becoming a concern in the crypto community, especially with the eagerly awaited Bitcoin halving event that is set to happen in just one day, on April 20, 2024. Now that the BTC price has made a slight rebound, let’s delve into reasons behind this recovery.

Top 5 Reasons BTC Price is Rising Today

Various reasons are behind the current surge of BTC price as discussed next.

1. Upcoming Bitcoin Halving

The fourth Bitcoin halving, set to occur tomorrow, is fueling anticipation and potentially driving up Bitcoin’s price today for various reasons. Firstly, the halving reduces the block reward for miners, leading to decreased Bitcoin supply and increased scarcity, boosting the price.

Additionally, historical data indicates price surges before and after previous halving events, attracting speculation and investment. The buzz surrounding the halving event generates positive market sentiment and drives speculative buying. Long-term investors view the halving as a bullish sign for Bitcoin’s value as a scarce asset.

Media coverage further raises awareness and interest in Bitcoin, attracting new investors. Miners may also alter their strategies pre-halving, impacting supply and demand dynamics.

Overall, the combination of reduced supply expectations and heightened excitement surrounding the halving event may contribute to Bitcoins price surge as traders and investors seek potential gains.

2. Bitcoin Short Liquidations

The notable increase in Bitcoin’s value today is believed to be caused by a major shift in the Bitcoin futures market. According to Coinglass, this action led to the closure of more than $53.27 million worth of BTC short positions in the past day, adding to a combined total of $294.13 million liquidated throughout the cryptocurrency market.

When traders go short, they expect Bitcoin’s price to fall. Nevertheless, in the event of an unforeseen increase in price, these traders encounter losses and must purchase Bitcoin again to offset their positions, resulting in a short squeeze.

As the number of short sellers forced to close positions due to rising losses increases, the purchasing demand in the market goes up, causing the price of Bitcoin to rise even further. This continuous increase in Bitcoin’s price is perpetuated by the feedback loop, creating a cycle that persists.

In the end, quick liquidations are essential in increasing demand and driving up Bitcoin’s price further in a phenomenon called a short squeeze.

3. Bearish Sentiment Sets the Stage for Bitcoin Price Continued Rise

Another factor driving the increase in Bitcoin’s price is the bearish sentiment held by traders and investors. Market intelligence firm Santiment emphasizes the recent strong showing of the cryptocurrency markets, with particular attention to Bitcoin hitting $63,800 in anticipation of the upcoming halving event. Even with the market rise, public opinion towards major cryptocurrencies is still pessimistic, potentially leading to additional price growth.

Throughout history, markets have frequently shifted against the prevailing sentiment, suggesting the possibility of upward movements. The tweet implies that the mix of present market conditions, the approaching halving event, and enduring bearish sentiment could lead to ongoing price increases in Bitcoin and other leading cryptocurrencies.

#Crypto markets have seen a boost today, as #Bitcoin has jumped back to $63.8K with just over 36 hours until its #halving event. The crowd has maintained a consistently #bearish sentiment toward top caps, which strengthens the argument for more rising. https://t.co/fPmv7gAQli pic.twitter.com/mAIZa8c5jJ

— Santiment (@santimentfeed) April 18, 2024

4. Increased Fear and Greed Index

The increased political tension between Iran and Israel and the decline in expectations for interest rate reductions by Federal Reserve this year, have pinned down BTC price. However, even with recent price adjustments, the Fear and Greed Index is 74 indicating that there is an increased positive sentiment and confidence in the market. This indicates that traders and investors have a positive outlook on the future of Bitcoin and are actively participating in the cryptocurrency market, hinting that the market could potentially see more growth.

5. Accumulation by Bitcoin Holders

Ongoing accumulation by Bitcoin holders is strong, as notable movements of BTC indicate investor optimism for future price increases. CryptoQuant data, a large movement of 27,700 BTC, worth $1.72 billion, into accumulation addresses as Bitcoin drops below $63,000. This signals increased investor interest in accumulating the cryptocurrency in anticipation of price growth.

CryptoQuant’s analysis confirms a record high of Bitcoin inflows into accumulation addresses, surpassing the previous high of 25,100 BTC. Accumulation addresses meet specific criteria, such as no outgoing transactions, a balance of over 10 BTC, and more than two incoming transactions. This data suggests a rise in Bitcoin moving into long-term holding addresses, reflecting investors’ growing confidence in the asset.

Current Bitcoin Price Action

Bitcon has experienced gains in the past day with a growth of 5.20% in its value to record $64,891.12 today. BTC has also witnessed a 5.11% increase in its market cap to reach $1.27 trillion. The trading activity in the market is heightened as the coin has seen an increase of 19.84% in its trading volume to hit $50.8 billion over the past 24 hours.

Conclusion

The increase in the price of Bitcoin today is the result of various contributing factors. The upcoming halving event is important in increasing the price by reducing Bitcoin’s supply and increasing its scarcity. Furthermore, the brief liquidations in the futures market result in a cycle of reinforcement that boosts demand and elevates the price. Despite the recent price adjustments, the Fear and Greed Index remains high, showing positive market sentiment. Investors are accumulating Bitcoin, indicating their optimism about its future value. As market dynamics continue to evolve, these factors collectively point towards a potential for ongoing price growth in Bitcoin and other leading cryptocurrencies.

 

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Filed under: News - @ January 1, 1970 12:00 am