The price of bitcoin has risen today and the general market price rally in cryptocurrencies suggests that bitcoin (
) may aim to end October on a positive note.
As of October 26, the growth of most major cryptocurrencies is measured in single digits. Bitcoin recorded a price increase of 5.15% in the last 24 hours and a 5.48% increase in the last seven days. While the current price fluctuates, BTC remains above the psychologically important $20,000 level. The following chart shows the BTC rally since October 24th.
BTC price. Source: Cointelegraph
Stocks start the day lower as bitcoin continues to hold above $20,000. Bitcoin momentum has been holding for three days now and we will see green candles on October 26th. The recent surge in prices has brought the total market capitalization of cryptocurrencies to over $1 trillion, and this comes after months of bitcoin trading in a tight sideways range of $18,000 to $20,000.
Hand in hand with the rise of bitcoin, most of the major cryptocurrencies, including ether (
) have recorded a rise in prices of more than 10% in the last 48 hours. There are several reasons behind the crypto rally.
The current rally in BTC and other major cryptocurrencies could indicate an increase in market confidence after several key events. Here are the most important growth drivers.
$1 billion short positions were liquidated
As the price of bitcoin dropped to $17,600 on June 18, open interest in BTC futures contracts increased. The current price action has triggered a wave of liquidations and we need to watch to see if we see a sharp decline in overall open interest.
The data shows that Bitcoin short sales totaled $550 million in the last 24 hours. $704 million worth of cross crypto shorts were liquidated on October 25th, with a total of $275 million as of October 26th.
Cryptocurrency liquidation schedule. Source: Coinglass
A short liquidation directly helps drive up the price of Bitcoin by triggering pressure from automatic buyers. The current rally shows an increase in open interest after being constant since October, which explains much of the sideways trading as well as the current rally.
Bitcoin options with open interest. Source: Coinglass
Macro movements start to turn in favor of bitcoin
Investor confidence in the cryptocurrency market may also increase due to their belief that the US Federal Reserve may raise interest rates slightly over the next two months. According to MacroMicro, a firm that publishes estimates of investor consensus around expected changes in interest rates, interest rates could be lower than previously thought in the near future.
Investors believe that interest rates may fall. Source: Macromicro
The graph indicates a possible reduction in the interest rate. Public opinion shows that future rates may fall, and investors believe that this has created an opportunity for a broad recovery in the cryptocurrency market.
The S&P 500 gives a general idea of the economy as a whole. Bitcoin and the S&P 500 are currently highly correlated.
Therefore, if interest rates are falling and the economy is growing, bitcoin could continue to rise if a similar reversal occurs in the stock markets. The better the macro climate, the better for the price of bitcoin.