Bitcoin rose as much as 9% on Thursday to trade above $25,000 for the first time in six months as the 2023 crypto rally continues.
Late Thursday morning, bitcoin (BTC-USD) traded as high as $25,104, bringing year-to-date gains for the world’s biggest cryptocurrency to north of 50%.
The latest rally in bitcoin comes after this week’s inflation data showed price pressured in the U.S. economy are both “hot and cold.”
Between Feb. 13-15, $112 million in bitcoin short positions were liquidated, or $84 million net of long positions, according to crypto derivatives aggregator CoinGlass.
“There was a combination of spot market buying and short-liquidations who may have been late to the party and thought going short after C.P.I. was a good long term macro trade,” said Christopher Newhouse, a crypto options trader for GSR.
Over the two-day period that followed inflation data published last month — which also sparked a bitcoin rally — $219 million worth of short positions on bitcoin were liquidated, or $95 million as net of long positions.
“Just goes to show how short-term price action driven by momentum and liquidations can overcome any longer term views people put on,” Newhouse added.
“We’ve had an amazingly strong rally … I’m surprised at the velocity of it,” Michael Novogratz, founder and CEO of Galaxy Digital, said at a conference on Wednesday.
“When I look at the price action, when I look at the excitement of customers calling that FOMO [is] building up, it wouldn’t surprise me if we’re at 30,000 by the end of the quarter,” Novogratz added.
As bitcoin leads crypto’s rally, all eyes are on its 200-week moving average, which is set at the $25,000 price marker according to Yahoo Finance data.
Total crypto volume across the market has risen 22% to $1.8 trillion in the last week, according to crypto data aggregator Nomics. Trading in North America, however, has fallen more than 15% to $64 billion over this period.
Elsewhere on Wednesday, legendary investor Charlie Munger, a longtime critic of cryptocurrencies, said of crypto trading and investing: “It’s worthless, it’s crazy, it’s not good, it’ll do nothing but harm, it’s antisocial to allow it.”
In recent weeks, U.S. financial authorities have ramped up actions in the sector. In January, banking regulators issued a joint statement warning of the risks assumed by banks that touch crypto activities.
The SEC has also picked up enforcement, fining exchange Kraken $30 million last week for its crypto staking program, the fourth of action against a U.S. crypto firm in the past six weeks.
In a Senate Banking Committee hearing Tuesday, Committee Chair Sen. Sherrod Brown (D-OH) lambasted industry firms and asked for the Committee to find common ground in order to pass cohesive legislation for crypto.
“The regulators understand that bitcoin is different, it’s not a security. It doesn’t have a centralized protocol with with a small group of programmers were in charge of it,” said bitcoin investor James Lavish.
“With that said, it’s going to be volatile and there’s going to be another sell off, especially if we head into a recession so while it’s great to see the price stabilize and move higher, I would just caution people from getting too excited.”
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