During the day of October 25, the cryptocurrency market soared, Bitcoin (BTC) rose above the symbolic threshold of 20,000 dollars and Ether (ETH) exceeded that of 1,500 dollars. What are the reasons for this rise, and can we expect it to continue in this direction?
The cryptocurrency market soars without warning
This hadn’t happened for several weeks: Bitcoin (BTC) is back above the symbolic bar of 20,000 dollars, dragging with it the entire market in a rise that is as dazzling as it is surprising. Also, we can rejoice to observe a green crypto market this morning:
State of the cryptocurrency market on the morning of October 26
So, currently, Bitcoin is showing a proud price at $20,250, but its progress remains lower than that of Ether (ETH), the eternal second. Indeed, over the last 24 hours, the price of BTC has been able to observe an increase of around 5%, where ETH outperformed to literally jump almost 14% in just over 8 hours.
Performance of ETH over the last 24 hours
At the time of writing these lines, ETH sits above the $1,500 threshold, which hadn’t happened to him since mid-September, after implementing his The Merge update. Indeed, following the latter, which passed the Ethereum blockchain into proof of stake (PoS), ETH has long vegetated between 1,200 and 1,400 dollars.
Overall, nearly all of the top 100 cryptocurrencies by market capitalization saw at least a few percent rise. Some stood out and experienced a greater increase in their price, like the ADA (11%), the SOL (10%), or even the FLOW (11.5%). ETH-related cryptocurrencies, such as Lido’s stETH or Ethereum Classic (ETC), were naturally also able to observe a significant increase.
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Why has the cryptocurrency market regained confidence?
While Bitcoin seemed to tend to de-correlate from the financial market lately, it would seem that the – some – good news from traditional finance have instilled confidence in crypto investors.
Indeed, over the last 24 hours, the major stock indices were able to see a significant increase. The Dow Jones Industrial Average (DJI) was able to see an increase of 1.07%, the S&P500 (SPX) an increase of 1.63%, and finally the Nasdaq Composite (IXIC) an increase of 2.25%.
Additionally, according to FactSet, 72% of S&P500 companies reporting third-quarter earnings exceeded Wall Street expectations. Thus, the indices modeled on the results of the largest companies seem to manage to partially relieve investors.
However, the rise in the rates of the major central banks remains the main concern of the latter, and this combined with expectations towards the Federal Reserve of the United States (FED), which tries somehow to control galloping inflation.
According to some observers, the FED could let go of the ballast by the end of the year so as not to completely suffocate the American economy, particularly with regard to the real estate market. The future remains impossible to predict, and we will have to wait until November 1st for the next FED meeting in order to hope to see a little more clearly.
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An explosion of liquidations
As with every major market move, some investors attempt to generate profit by betting on the rise or fall of a cryptocurrency. However, liquidations have literally exploded over the past 24 hours, surpassing the billion dollar threshold.
24 hour liquidation status
Unsurprisingly, the overwhelming majority of traders affected by this wave of liquidations attempted to shorts certain assets, in other words to bet on their fall. The vast majority of liquidations involved BTC ($500 million) and ETH ($434.5 million).
As the graph below shows, the wave of liquidations over the past 24 hours has greatly exceeded the previous wave of $305 million on September 9th.
History of short (in red) and long (in green) liquidations with the price of BTC (in yellow)
All in all, the cryptocurrency market has made its first really noticeable move here in a long time, but it remains difficult to predict the futureso much the financial market is itself in the most complete fog.
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Sources: Coin360, Yahoo Finance, Coinglass
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