Key Points
- Bitcoin reaches a new all-time high of $69,300, marking a significant recovery since its downturn in November 2021.
- Bitcoin’s price rise is attributed to factors including short liquidations and the impact of Bitcoin exchange-traded funds (ETFs).
Bitcoin recently achieved a new all-time high, reaching $69,300.
This milestone comes around two and a half years after the peak of the previous bull market.
Recovery from Crypto Winter
November 2021 marked a period of decline for Bitcoin, which subsequently entered a prolonged crypto winter.
However, the beginning of 2023 brought signs of recovery, and Bitcoin’s price has been on a steady rise since.
Once an asset surpasses its previous all-time high, it enters a new phase known as price discovery.
In this phase, it’s uncertain what the future holds as there are no established resistance or support levels to guide traders.
Impact of Short Liquidations and ETFs
The recent surge in Bitcoin’s price has been partly attributed to short liquidations.
When shorts are liquidated, traders who had bet on Bitcoin’s price falling are forced to buy back the Bitcoin they sold, often at a higher price.
This sudden increase in buying pressure can cause Bitcoin’s price to rise rapidly, a phenomenon known as a short squeeze.
Such events can significantly amplify price movements and volatility in the Bitcoin market.
The rapid increase in Bitcoin’s price has also been influenced by the introduction of Bitcoin ETFs in the United States.
Inflows into these financial products have been consistent since their approval by the United States Securities and Exchange Commission.
For instance, BlackRock’s iShares Bitcoin Trust crossed $10 billion in assets under management in just over seven weeks, a feat that took the first U.S. gold-backed ETF two years to achieve.
The consistent capital injection into Bitcoin ETFs indicates a strong demand from Wall Street and institutional investors.
The increased demand for Bitcoin from these ETFs leads to more Bitcoin being purchased from the open market, further driving up its price.
This trend shows no signs of slowing down, with U.S.-based Bitcoin ETFs recently seeing net inflows of $562 million in a single day.