Bitcoin market analysts are speculating over what fueled the cryptocurrency’s price jump on Monday, and some of the experts say a short squeeze of heavily leveraged traders may have added to upward pressure on prices.
Bitcoin and other cryptocurrencies have risen dramatically over the past 24 hours. Bitcoin, the world’s largest cryptocurrency, was trading at $39,189 at press time, for a 15% price gain.
Short liquidations – bearish trades where the principal was wiped out due to margin calls – kicked in around 9 p.m. ET time Sunday, helping to improve market sentiment and pushing the price of BTC up, according to Laurent Kssis, global head of exchange-traded products at 21Shares AG.
“Many on Twitter have been calling for a short squeeze for weeks, and the calls appear to have been answered,” said Kssis. “It’s all about market timing.”
Pedro Febrocas, blockchain analyst at Quantum Economics, attributes the price surge to short-term retail sellers getting “rekt.” Rekt is internet slang for “wrecked” or “utterly destroyed.”
Bitcoin analyst “Willy Woo” tweeted:
“We completely agree with his take,” Febrocas said of Woo’s tweet.
Bloomberg News reported early Monday that the U.S. Department of Justice is investigating Tether for a possible offense conducted years ago. The outlet cited people with knowledge of the matter.
“Big government has their eyes on stablecoins, and that is not surprising anyone,” Oanda Senior Market Analyst Edward Moya told CoinDesk.
Although the price of bitcoin dipped on the news, falling about $1,000 shortly after the report came out, analysts don’t think the Tether news will impact the market significantly.
“In regards to the Tether FUD, we’re not too concerned,” said Febrocas. FUD, which stands for “fear, uncertainty and doubt,” is often used to refer to bearish news or rumors. “Bitcoin has completely ignored that news for the time being.”
Denis Vinokorouv, head of research at Synergia Capital, said the Tether news is less of a market negative because it is an investigation into executives and alleged practices. He said that’s not as concerning as “an investigation of what Tether is – a stablecoin.”
“Thus, akin to the news last year when BitMEX was investigated, the entity remained intact and, in line with regulatory pressures, increased its [know your customer/anti-money laundering] approach,” he added.
Kssis said that with negative headlines continuing to pile on and with Tether in a fragile market, there could still be “repercussions if investigations point to more severe allegations.”
Source: Coindesk
