Bitcoin’s ascent to $44,000 triggers short squeeze amid “bullish catapult”

abdelaziz Fathi

Bitcoin’s price soared past the $44,000 mark for the first time in over a year, catching many traders off guard and resulting in the liquidation of massive leveraged short positions.

The surge, which began on Monday after the primary digital asset broke through the $42,000 barrier, marks a significant rebound from the previous year’s lows and brings renewed optimism to the cryptocurrency market.

This marks the first time in more than a year that the cryptocurrency has hit such a high, signaling a reversal of the downturn that plagued the crypto market following last year’s collapse of FTX and other crypto businesses.

The surge, which saw Bitcoin briefly top $44,000 to a 20-month high, is attributed to expectations of a U.S. interest rate cut and optimism over the approval of exchange-traded spot bitcoin funds by American regulators. This newfound momentum is casting off the gloom that had settled over the crypto markets.

Data from Coinglass reveals a massive amount of leveraged positions in the cryptocurrency market have been liquidated over the past 24 hours. Bitfinex analysts pointed to two specific BTC price levels – $41,950 and $42,200 – where significant liquidations have occurred due to the recent volatility. They speculate that surpassing these levels could lead to a “bullish catapult” for Bitcoin, as short sellers may be forced to buy to close their positions.

Luuk Strijers, Chief Commercial Officer at Deribit, cited a “confluence of factors” for Bitcoin’s remarkable ascent. These include expectations of U.S. Securities and Exchange Commission’s approval of a spot Bitcoin ETF, which could broaden market access. Additionally, Strijers pointed out that easing inflation fears may prompt central banks to reduce rate hikes, making riskier assets like cryptocurrencies more appealing.

The decent gains come as the crypto community is grappling with the seismic shift following Changpeng “CZ” Zhao’s exit from Binance after he plead guilty to criminal charges by the U.S. Department of Justice.

Zhao’s departure marks a critical moment for Binance and a vital step for the broader crypto industry, which is still finding its footing after the devastating collapse of FTX in 2022. As the dust settles, the $4 billion settlement of the case is seen by many as a cleansing wave that could pave the way for further regulatory clarity.

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