Bitcoin, which hit a recent low of $52,500 last Friday, has rebounded above $57,000, and the price volatility has led to a wave of short-term liquidations.
In the past 24 hours alone, $45 million worth of Bitcoin positions were liquidated, with short positions accounting for the majority at $36 million. The broader cryptocurrency market experienced more than $126 million in liquidations over the same period. According to Coinglass data, the majority of these cryptocurrency liquidations combined (around $93 million) were short positions.
Following today’s Bitcoin price rally, BRN analyst Valentin Fournier told The Block that if the digital asset were to surpass its local high of $59,750 from last Tuesday, it could signal the start of a sustained bullish trend. However, he added that this would depend on two key factors: how Donald Trump performs in tonight’s debate with Kamala Harris and Wednesday’s Consumer Price Index (CPI) numbers, which could provide clues as to whether the U.S. Federal Reserve is likely to cut rates at its Federal Open Market Committee (FOMC) meeting next week.
“A break above the $59,750 resistance level would be a strong signal of a potential bullish trend, and positive inflation-related news could further fuel this upward momentum,” Fournier said. However, he noted that market volatility remains high, and further downside is possible, especially as the Fed’s rate decision approaches on September 18. “There is a potential ‘buy the rumor, sell the news’ dynamic that could play out around inflation numbers and the upcoming rate cut,” he added.
Bitcoin’s price movements reflect a close correlation with the S&P 500.
According to analysts, Bitcoin Bitcoin
+3.15%
“We see Bitcoin’s moves as being tied to the performance of U.S. equities,” a Bitfinex analyst told The Block. “We believe the primary driver of Bitcoin’s decline last week was the decline in the S&P 500, which ended the week down 4.25%, the worst weekly performance for the index since March 2023.”
Last week, the S&P 500, with a market cap of $45.8 trillion, fell 4.25%, while Bitcoin, with a much smaller market cap of $1.07 trillion, fell 5.45%. This shows that while cryptocurrencies are increasingly correlated with stocks, they are less sensitive to stocks than they were in late July, when the S&P 500 fell 2.06% and Bitcoin plunged 14.9% over the same period.
“The reduced sensitivity to downward moves in stocks could be a sign of seller exhaustion in the Bitcoin market, supporting the theory that traditional financial investors tend to de-risk riskier assets like cryptocurrencies rather than stocks in response to market declines,” Bitfinex analysts said.
According to The Block’s Price Page, Bitcoin is up 3% over the past 24 hours and was trading at $57,010 at 5:44 a.m. ET. Ether is up 1.3% over the same period, reaching $2,347.
Disclaimer: The Block is an independent media outlet providing news, research and data. As of November 2023, Foresight Ventures is the largest investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information on the cryptocurrency industry. Below are the current financial disclosures.
© 2024 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.