Four Reasons Bitcoin is Surging

Bitcoin and other cryptocurrencies have bounced back from losses incurred at the end of last week and carried on rising to prices not seen since last summer.

Bitcoin’s price has risen by 10% over the past 24 hours to $26K. This surge in Bitcoin’s price is due to four primary factors.

Correlation with the Stock Market

Cryptocurrencies, including Bitcoin, are correlated with the stock market, which has been sensitive to a macro backdrop of high inflation and rising interest rates over the past year. 

Stocks and cryptocurrencies have been under pressure in the last week amid worries that the Federal Reserve will step up its pace of interest-rate increases this month. However, the crisis of confidence across banks has pushed traders to rule out a bigger rate hike, which is supportive of both stocks and cryptocurrencies.

Buying Pressure from Binance

Binance CEO Changpeng Zhao tweeted that given the changes in stablecoins and banks, Binance,  the world’s largest cryptocurrency exchange, will convert the remaining of their $1 billion Industry Recovery Initiative funds from Binance USD to native crypto, including Bitcoin, Binance Coin, and Ether.

Technical Market Factors

As prices of Bitcoin and other cryptocurrencies plunged over the weekend, traders may have been a bit too eager to take bearish positions betting on further declines. 

As stock-futures shot higher late Sunday following news of a resolution to the crisis at Silicon Valley Bank, and the closure of Signature Bank, bearish traders were wiped out. 

Almost $200 million in short positions against Bitcoin were forcibly closed or liquidated on Sunday and Monday, according to crypto data firm Coinglass, adding buy pressure into a market that was already turning higher.

Circle Internet Financial’s Stability

Circle Internet Financial, which issues the USD Coin stablecoin that de-pegged from the dollar over the weekend, looks to be out of the woods. Circle held a significant amount of the assets backing USDC at Silicon Valley Bank, and news that depositors will be repaid in full removes risks that the stablecoin is unbacked.

In summary, the recent surge in Bitcoin’s price can be attributed to a combination of factors, including the correlation with the stock market, buying pressure from Binance, technical market factors, and the stability of Circle Internet Financial. However, it remains to be seen if this surge will continue in the long term.

As always, this article does not constitute financial advice. You should be sure to do your research and consult a professional financial advisor before making a major investment decision.

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