Why Is Bitcoin Price Up Today?

Bitcoin prices are up today, and a market-wide rally in crypto prices suggests that BTC and Ether (ETH) may be aiming to end the month of October in the black.

As of October 26, 2022, most major cryptocurrencies have single-digit gains. Bitcoin recorded a price increase of 5.15% in the last 24 hours and an increase of 5.48% in the last 7 days. While the current price fluctuates, BTC remains above the psychologically important $20,000 level. The following chart shows the BTC rally since October 24, 2022.

Stocks start the day down as Bitcoin continues to hold above $20,000. Bitcoin’s momentum has continued for 3 days now and is seeing green lights today. The recent price surge pushed Bitcoin’s total market cap above the $1T mark and comes after months of narrow sideways trading range of $18,000 and $20,000.

Hand in hand with Bitcoin’s growth, most major cryptocurrencies including Ethereum (ETH), Solana (SOL), Cardano (ADA), Polygon (MATIC), Ripple (XRP) and Tron (TRX) recorded more than 10% price increases during the last 48 hours. There are several reasons for the crypto rally.

The current rally in BTC and other major cryptocurrencies may indicate an increase in confidence in the market following several key developments; here we provide details of the most important drivers of growth

$1 billion in short positions were liquidated

Since the Bitcoin price crashed to $17,600 on June 18, open interest in BTC futures contracts has increased. The current price movement triggered a wave of liquidations and a data point to keep an eye on is whether we see a sharp reduction in overall open interest.

Data shows that Bitcoin short liquidations accounted for $550 million in liquidations over the past 24 hours. $704 million in cross-crypto shorts were liquidated on October 25, with the October 26 figure so far at $275 million.

Short liquidations directly help push the Bitcoin price higher by forcing automated buying pressure. The current rally sees open interest pick up after being consistent since October, which explains much of the sideways trading as well as the current rally.

Macro movements are starting to turn in Bitcoin’s favor

Investors’ confidence in the crypto market may also increase due to their belief that the US Federal Reserve may roll out smaller interest rate hikes over the next two months. According to Macromicro, a firm that publishes investors’ consensus estimates of expected changes in interest rates, it shows that interest rates may be lower than previously thought in the near future.

The graph indicates a possible decrease in interest rate increases. Public opinion shows that future rates may fall, and investors believe that this has created the opportunity for a broad recovery of the crypto market.

The S&P 500 provides a general overview of the economy in general. Currently, Bitcoin and the S&P 500 share a high correlation coefficient.

Therefore, if interest rates decrease and the economy grows, Bitcoin could continue to rise should a similar reversal take place in the stock markets. The better the macro climate, the better for the Bitcoin price.

Related: Why is the crypto market up today?

Stocks stage a multi-day rally, and the UK gets a crypto-friendly leader

The election of Rishi Sunak as the new Prime Minister of the United Kingdom seems to have boosted sentiment for crypto investors. Sunak is a crypto lawyer and once ordered a royal NFT. As a result, the world expects him to make major reforms in the crypto sector.

During his tenure as Chancellor of the Exchequer under Boris Johnson, Sunak indicated his desire to make the UK a cryptocurrency hub.

In April 2022, Sunak said:

“It is my ambition to make the UK a global hub for crypto-asset technology and the measures we have outlined today will help ensure that firms can invest, innovate and scale up in this country.”

It is still too early to determine whether the October 26 rally is a sign of a trend change, but one thing is clear. Factors affecting the Bitcoin price and the crypto market are clearly driven by forced liquidation of futures contracts, positive movement in macro markets and investors’ expectation that central bank policy and potential crypto regulatory framework will improve.