Over $300 million in leveraged BTC short positions were liquidated, resulting in over $300 million buying pressure for BTC. This is a substantial amount during a bear market when it doesn't take as much money to push prices up or down. The demonstration also had the help of the made that Binance converted $1 billion worth of BUSD into BTC, ETH, BNB, and other unnamed cryptocurrencies.
Another factor is the official announcement of the Ethereum Shanghai hard fork update date (April 12), which will allow users to withdraw their staked ETH and is expected to stimulate market demand for Ethereum. Institutional investors are expected to find ETH more attractive because they love the yield, and the ability to earn a return on what is effectively the next payments network is an attractive prospect. It is believed that many institutions hesitated to stake ETH because it was not possible to undo it, but this will change with Shanghai, and millions if not billions of dollars could flow into ETH in the days and weeks that follow.
BTC is also considered sensitive to changes in money supplyand as such, many have argued that the increase in the size of the Fed's balance sheet is the key driver of the rally.
Last week, the Fed and its allies effectively bailed out SVB depositors. As part of this bailout, the Fed had to increase its balance sheet by $300 billion. The Fed printed a new $300 billion as Bitcoin was built in response to the 2008 bank bailouts. The price of BTC was parabolic in response to the rescue of SVB. A similar drama is playing out in Europe, with UBS paying 3 billion Swiss francs ($3.2 billion) for 167-year-old Credit Suisse, once worth more than $90 billion. This purchase was part of an urgent plan by Swiss and international leaders to restore confidence in the banking system.
With all the talk about bailouts, there is concern about how unsound the US banking system is. The banking system is compared to a house of cards that could collapse, and the US economy is on the brink of the biggest economic disaster in its history. The concern is that banks that were too big to fail are now even more insolvent. Bank bailouts will devalue the dollar, and anyone with US dollars will pay, including taxpayers in the United States, non-taxpayers, and people around the world who hold US dollar-denominated debt instruments because the dollar is debasing to background bank bailouts. This news has been seen as bullish for Bitcoin and the crypto market in general, as it could lead to further investment in Bitcoin as a hedge against economic uncertainty and inflation. Bitcoin prices have risen due to its decentralized nature and lack of ties to traditional financial institutions
Of course, not everything will be smooth sailing; there will be occasional bumps, such as the CFTC investigation of Binance. Bitcoin and crypto prices fell on this news. This is likely to have a short-term impact on prices. In conclusion, a number of factors contributed to the recent surge in the cryptocurrency market, in which Bitcoin gained 30%. A massive short tightening, a multi-billion dollar purchase by Binance, news about the upcoming Ethereum upgrade, and the Federal Reserve's response to the banking crisis are all contributing factors. When over $300 million in leveraged BTC short positions were sold, there was a lot of pressure to buy BTC. The next Ethereum upgrade is likely to increase demand and attract institutional investors who are interested in the return potential. BTC's sensitivity to changes in the money supply also played a role in the rally, with the increase in the size of the Federal Reserve's balance sheet being a key factor. As the cryptocurrency market continues to change, it is clear that world events and political decisions will continue to affect its path.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are my own. These do not represent the views of The Economic Times)
