The price of bitcoin (BTC) surprised everyone Thursday by soaring above $24,500, its highest level in six months, despite the negative developments that shook the cryptocurrency industry in recent weeks. But why did BTC rise?
Although earlier in the week the cryptocurrency showed signs of pulling back, bitcoin benefited from renewed investor confidence from the U.S. Consumer Price Index (CPI) report on Tuesday, February 14, which showed inflation slowing slightly to 6.4%.
While markets initially showed bearish signals from the report, the next day’s surge showed that investor anxiety about the future of the U.S. economy and the Federal Reserve’s (Fed) upcoming monetary policy moves is waning.
BTC even peaked at $25,122 during today’s trading on Thursday, but this level was rejected within minutes.
Why was bitcoin’s rise surprising?
The surprising thing about bitcoin’s recent rise is that it managed to skyrocket amid all the regulatory moves against the cryptocurrency industry that have happened in recent weeks.
Just last week, the U.S. Securities and Exchange Commission (SEC) unleashed a crackdown on the Kraken exchange and Binance stablecoin (BUSD) issuer Paxos.
In addition, CPI results missed expectations for consumer prices, which had been expected at 6.2% y/y, coming in at 6.4%.
All this presaged a bearish week for the cryptocurrency market. In fact, today’s Thursday bitcoin price rally triggered $234 million in settlements in the futures market, according to data from CoinGlass.
To open any contract in the crypto futures market, the holder must first submit an initial collateral. “Liquidation” occurs when the trader’s bet fails, meaning the asset price moved in a direction opposite to what the trader bet on when placing the trade and the losses have consumed a specified percentage of the initial collateral.
Recent settlements show that investors were betting on bitcoin’s decline this week.
What will happen now to the BTC price?
Analyst and co-founder of Bitazu Capital, Mohit Sorout, stated that bitcoin showed an extremely important signal, which has only appeared three times in its history: the DCA indicator.
Through his Twitter account, Sorout explained that the metric suggests a “raging bull market.”
The mother of all $btc bullish signals has flashed – DCA indicator
Historically, it has flashed only thrice in btc's existence & each occurence led to massive rallies of
Today marks the 4th time this signal is suggesting a raging bullmarket pic.twitter.com/suMVlWFrzc
— Mohit Sorout 📈 (@singhsoro) February 16, 2023
The appearance of this indicator, which the analyst described as “the mother of all BTC bullish signals,” in the past led to massive bitcoin price rallies of 7,400% in 2015, 160% in 2019, and, most recently, 640% in 2020.
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