Bitcoin’s price has just surpassed $55,000 which brings it to a new high since January 2022, confirming the hopes of investors that the bull market is right around the corner.
The huge price gain was triggered by the increasing transaction volume of Bitcoin Spot ETF that also reached a new high since its launch.
Although it might be positive, some traders are taken aback by the sudden volatility as they experience losses for more than $300 Million accumulatively.
Bitcoin surpasses $55,000
Bitcoin’s price increase was triggered by the transaction volume of Bitcoin Spot ETFs where nine of them reached a new accumulative high ever since their launch in January 2024.
According to data from Bloomberg Terminal that was presented by Bloomberg Analyst, Eric Balchunas, Bitcoin Spot ETFs daily transaction volume has just reached $2.4 Billion yesterday, marking a significant increase of the average $1 Billion daily transaction volume that the ETF usually experienced.
Most of this volume comes from BlackRock, the biggest financial institution in the world with $10 Trillion of assets under management (AUM).
Reportedly, more than half of the accumulative daily transaction volume was reached because of BlackRock, with its ETF, IBIT, reaching transaction volume of $1.3 Billion in just one day.
This volume has managed to increase Bitcoin’s price significantly from the real volume it brought and the narrative around it.
With Bitcoin Spot ETF, the issuers or ETF Managers are obligated to buy Bitcoin in the same amount as those ETFs, so when a volume increases, then they have to match that volume with real Bitcoin.
Alongside this, the buying volume in the market also gave the perception to retail investors that the price of Bitcoin is going up again, essentially creating a new buying volume from the overall retail investors and traders.
Sadly, the price increase also comes with a price, as traders in the futures market experience losses for more than $379.84 Million in the last 24 hours.
According to data from Coinglass, most of these liquidated positions are short positions, which are traders hoping that the price of Bitcoin and the overall crypto market would drop.
That perception comes from the near transition from February into March, which usually gives volatility that leads most cryptocurrencies to drop in value.
Oddly enough, most of the losses experienced are from Ethereum related derivatives contract traders and not Bitcoin related derivatives contract traders, as ETHUSDT became the contract that experienced the most losses that stands around $10.38 Million.
But overall, the market does not look to be set for a huge increase when looking at the previous cycle, since the Bitcoin Halving has not happened yet and usually there is a huge correction before reaching new all time highs.
Nearing 2021 Bull Market Peak
Looking at the monthly chart of Bitcoin, it can be seen that the price is nearing the 2021 bull market highs which probably can trigger a correction.
Looking at the chart, it can also be seen that according to the RSI indicator which usually tells when a transaction volume is reaching its peak be it overbought or oversold, there is a potential reversal with Bitcoin having a little more room to go before going down.
Usually the monthly RSI gives more accurate signs of reversal when it reaches its overbought or oversold value. Seeing that the RSI is nearing its overbought value, there might be signs of reversal so investors need to be careful and not FOMO into the market.
But overall indicators might be wrong, so the right thing to do is to buy bitcoin cumulatively using methods such as Dollar Cost Averaging.
To do this users can use Bitrue's auto invest feature to always accumulate Bitcoin safely and with discipline.
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