KEY TAKEAWAYS
- The price of bitcoin surpassed $35,000 for the first time since May 2022, as market speculators anticipate the imminent approval of a spot bitcoin ETF in the US.
- More than $250 million in bitcoin short positions were liquidated in the last three days.
- According to the head of research at Deutsche Digital Assets, Andrรฉ Dragosch, a short squeeze was a key contributing factor to the recent rise in bitcoin price.
- The Bitcoin dominance index, calculated by TradingView, also reached 54.26%, which is its highest level since April 2021.
- As bitcoin's dominance over the cryptocurrency market increases, a report from Kaiko indicates that delistings of crypto assets from exchanges are occurring at the fastest pace in history.
The price of Bitcoin briefly surpassed the $35,000 mark this week and some analysts think the growing participation of small investors may bode well for the coming weeks, but the rise of the cryptocurrency has not helped the rest of the market.
Negotiation related to the news of a possible approval of a spot bitcoin exchange-traded fund (ETF) intensified, pushing the price above $30,000 and squeezing short positions, according to Andrรฉ Dragosch, head of research at Deutsche Digital Assets. He short squeeze led to the liquidation of short positions of more than $250 million in the last three days, according to data from Coinglass.
At the same time, the Bitcoin Dominance Index (BDI), a measure of bitcoin's share of the overall crypto market, reached levels not seen since April 2021.
Bitcoin Dominance Index at Highest Levels in Two Years
While a rising bitcoin tends to boost all crypto assets, the rest of the market has not been able to keep pace with bitcoin this week. In fact, this has been the trend for almost a year, as the BDI has seen a steady increase since the FTX crypto exchange collapse in November 2022. Today, the BDI is about 54.4%, its highest level since April 2021.
TradingView
In fact, the darlings of the previous cryptocurrency bull market have not fared well relative to bitcoin over the past year. For example, Ethereum's native crypto asset ether rose just 14% last year, compared to a roughly 66% gain for bitcoin.
At the same time, Bloomberg reported that crypto tokens are being delisted from exchanges at a rate never before seen in the history of the industry, according to data from Kaiko. Nearly 3,500 crypto token delistings have already occurred or are expected to occur in 2023, and Coinbase (CURRENCY), which currently being sued by the US Securities and Exchange Commission.it is said to have delisted 80 trading pairs this month alone.
Are Small Investors Laying the Foundation for the Bitcoin Bull Market?
Dragosch saw an increase in bitcoin wallet activity for both small and large investors, but there were one number that stood out. An increase in the "average value of transfer volumes on the Bitcoin blockchain" (an indicator of small investor participation) could hold some clues about the direction of Bitcoin's price.
โSmall investor participation is a necessary condition for a sustained cryptoasset bull market,โ Dragosch wrote.
