On October 25, the price of Bitcoin rose above the psychologically important level of $20,000, which gives hope thatthat the main cryptocurrency will end this month in positive territory.
The chart below shows the price dynamics of bitcoin since October 24, 2022.
The bitcoin momentum has been observed for 3 days now, and as a result, the total market capitalization of the crypto market has risen above the $1 trillion mark. Several events may have contributed to this.
Since the price of bitcoin fell to $18 on June 1817,600, open interest in BTC futures contracts skyrocketed. The current price movement has triggered a wave of liquidations, and now it is worth watching for a sharp decline in total open interest.
The data show that the elimination of shortBitcoin positions on October 26 amounted to $550 million. Cross-crypto shorts in the amount of $704 million were liquidated on October 25, the amount on October 26 was $275 million.
Cryptocurrency liquidation schedule. Source: Coinglass
Liquidating Shorts Directly Helps Raise Pricebitcoin, causing automatic pressure to buy. The current rally shows that open interest is gaining momentum after a period of stability in October, which explains much of the sideways trading as well as the current rally.
Bitcoin options with open interest. Source: Coinglass
Investor confidence in the cryptocurrency market may also increase due to the belief that in the next two months the US Federal Reserve may raise interest rates less than expected.
According to Macromicro, which publishes investor estimates of expected interest rate changes, actual interest rates may be lower than previously thought.
Investors believe that interest rates may fall. Source: Macromicro
In this regard, investors believe that opportunities are being created for a broad recovery of the cryptocurrency market.
The S&P 500 gives a general idea ofeconomy as a whole, and currently Bitcoin and the S&P 500 have a high correlation coefficient. Accordingly, the better the macroclimate, the higher the price of Bitcoin.
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