Bitcoin has surged back into the limelight, embarking on an impressive trajectory that has seen it surpass the $65,000 mark, achieving new milestones against the euro and pound, and edging closer to its previous peak in US dollar valuation.
Image by katemangostar on Freepik
There has been a notable change in Bitcoin's trading behavior, particularly during weekends, where trading volumes have seen a significant decrease. Since the beginning of 2024, only 13% of Bitcoin transactions occurred on Saturdays and Sundays, marking a drop from 17% in the previous year and a significant decline from 24% in 2018. This trend indicates a maturation of the Bitcoin market, with institutional investors taking on a more prominent role and adhering to conventional trading hours.
Furthermore, the recent surge in prices has triggered a rise in the liquidation of leveraged Bitcoin positions, especially short ones. According to CoinGlass data, over $80 million worth of Bitcoin positions were liquidated, with the majority being short positions. Moreover, within the last 24 hours, approximately $160 million worth of short positions were liquidated, with the total liquidation across centralized exchanges amounting to $251 million, excluding decentralized exchanges.
Conversely, there's a consistent upward trend in the open interest (OI) of Bitcoin options for the current month's expiration. The OI has now exceeded $30 billion, marking a 10% increase. This surge in value within these contracts could potentially be attributed to the anticipation surrounding Bitcoin halving.
The Influence of Global Economic Factors
The performance of Bitcoin has been significantly influenced by global economic factors, particularly the strength of the US dollar against other major currencies. The Dollar Index, which monitors the US currency's performance against six key counterparts, displayed an upward trajectory, experiencing a 2.7% increase throughout January and February 2023. This movement holds implications for Bitcoin's valuation, as digital currency assets now have new comparative benchmarks in euros and pounds.
A recent market analysis conducted by Grayscale highlights a consistent decline in US inflation since the beginning of the year, prompting a shift in market expectations towards anticipating higher inflation rates. Analysts at Grayscale remarked, "In general, the persistent high US interest rates typically strengthen the dollar, potentially adversely impacting Bitcoin."