As the United States Congress deferred the potential of a government shutdown until mid-November, Bitcoin experienced a significant rally. Within hours, the cryptocurrency observed its most substantial daily surge since August 29. This move is not only significant from a technical standpoint but holds importance in the backdrop of broader financial scenarios.
SEC's role amid the shutdown drama
An important takeaway from the postponement of the U.S. government shutdown is the consequent ability for the U.S. Securities and Exchange Commission (SEC) to potentially adhere to its Bitcoin ETF decision timeline in the ensuing months.
It is noteworthy that, only last week, the SEC had postponed its decision on numerous Bitcoin ETF applications, one of which was BlackRock's. Speculation abounds that the Bitcoin market could see a capital inflow of approximately $600 billion if a spot Bitcoin ETF is introduced, as estimated by a recent report.
The Uptober phenomenon
Historically, October has been fruitful for Bitcoin, often coined as "Uptober". The current rally coinciding with the onset of October is no accident.
Since 2012, Bitcoin has on average seen an upswing of 20.82% during this month, with 2014 and 2018 being the outliers.
The crypto derivatives market reveals a noteworthy trend: nearly $43 million worth of shorts have been liquidated in the last day.
For perspective, a mere $6 million worth of long positions faced liquidation. An analogous short liquidation event on Sept. 12–13 preceded a commendable 5.5% rally, catapulting Bitcoin’s price from approximately $25,830 to beyond $27,200 by Sept. 19.
Short sellers liquidating positions essentially buy the underlying asset, implying that this influx of new buyers coupled with the short liquidations likely further propelled the BTC/USD pair.
