Bitcoin, stocks, and altcoins rallied after days of losses; however, is the current bullish drive sustainable?
The price of Bitcoin is up today, and a broad-market rally in the values of digital assets suggests that BTC, ETH, and BNB could be rebounding from yearly lows.
The existing rally in Bitcoin and other altcoins could show the market is in the course of finishing its purge, even with issues in liquidity being faced by Genesis Trading and Digital Currency Group being unsettled.
Also, the stock market is showing green candles, with DJIA or Dow Jones Industrial posting a gain of 0.94 percent and the S&P 500 rallying 1 percent. Equities traders will seek strong growth to prove market resiliency that would encourage prices to go higher and higher.
According to Cointelegraph, BTC tends to keep closely associated with United States equities and show similar price dynamics.
Continue reading to know the reasons why the BTC price rallied after days of pain and the information on key drivers of this growth.
BTC Open Interest Stays Tilted To Short Traders
Since the price of BTC dropped to $17 600 in June, the open interest of futures agreements has been rising and falling. Sharp moves in the price of BTC could trigger liquidation. On the other hand, it is hard to figure out whether this move would be to the downside or upside.
A lot of investors agree that once Federal Reserve was to turn on its existing rule of quantitative tightening as well as increases in interest rates, the price of BTC could rush to the positive aspect and liquidate a considerable part of the short interest in futures agreements.
The fall down of the FTX exchange triggered a signal of liquidation that sent the price of BTC spiraling down. According to the report, $549M in cross crypto longs was liquidated on the 7th of November, sending the price of BTC below $16,000.
On the other hand, short liquidations assist push the price of BTC higher by pressuring automated buy pressure. The current rally is seeing a short interest-gaining drive that can further assist the price of BTC.
Longer Term Statistic is in Favor of BTC, according to Analysts.
The assurance of traders in the cryptocurrency market could also be rising because of their faith that the US Federal Reserve could even out slight interest rate increases in the following weeks.
In the Federal Reserve statement, the possibility of rule change does keep open:
“To get a stance of the fiscal rule, this is sufficiently preventive to bring back inflation to 2% in due course.” In figuring out the speed of future hikes, the committee will consider the increasing tightening of fiscal policy, the lag with that policy affects the industry’s activity and inflation, and financial and economic developments.
Reports from MacroMicro, a company that publishes investor agreements estimated on anticipated modifications in interest rate, reveals that interest rate might be lower than expected in the coming weeks.
The graph points out a possible hold-up in the interest rate increase. The public response shows that future rates might drop, and traders believe this has made the chance for a wide crypto community revival.
Nasdaq and the S&P 500 give an overview of the industry in general. At present, BTC, the S&P 500, and Nasdaq share a high connection coefficient. So, when interest rates ease as well as the economy grows, BTC could overturn course when the same turnaround was to happen in the equity market. If the macro climate is good, the price of BTC is better.
BTC Hits a Yearly Low and Reveals Indications of Being Oversold
The RSI, or Relative Strength Index, is a renowned technical study measuring whether BTC is oversold or overbought.
If the RSI is under 30, BTC is regarded as oversold, and if RSI goes under 30, BTC sees a quick price bounce upward.
From the point of technical study, the market has been below heavy selling, and usually, if the RSI dips to 30, it indicates oversold cases. By checking the daily and weekly relative strength index, you will see that the pointer has a high occurrence of returning from the oversold sector, and the asset price follows.
While the price of BTC is showing a bullish drive in the short term, the bigger challenges of hiking interest rates, decreased inflow as well as liquidity in the cryptocurrency market, and the risk of infectivity from the fall down of FTC affecting the whole market continues to weigh on the price of Bitcoin.