The bitcoin price has broken through the $50,000 mark today. That is a level that has not been equaled since the end of 2021. But what caused it to rise so quickly? This could be due to various factors, such as liquidations, the bitcoin ETFs and lower selling pressure from bitcoin miners. Below we take a closer look at the matter.
The reasons for today’s bitcoin price rise
A frequently cited reason for the strong increase in the bitcoin price today is the bitcoin ETFs. These Exchange-Traded Funds saw a huge increase in funds last week, with an inflow of a whopping $1.1 billion. BlackRock’s IBIT fund, for example, outpaced 99.98% of all other ETFs after raising $3.19 billion since January 11.
Until recently, there have been some concerns about the ETFs, as Grayscale’s ETF (GBTC) has not been doing so well. The stock exchange fund saw a huge amount of money disappear to competitors. A large part of the inflows of all bitcoin ETFs came from Grayscale’s fund. However, that outflow appears to be stopping, while the inflow of the other ETFs continues.
Liquidations cause rapid growth
Specifically surpassing the $50,000 mark today may be due to the massive series of liquidations that took place. A whopping $106 million worth of positions have been liquidated in the last 4 hours. Of these, the majority were short positions, totaling $94 million. The remaining $12 million were long positions.
In a liquidation, a trader is forced to close his or her position. This is done to limit further losses. This can lead to an acceleration of the price increase. Partly because these traders are forced to buy the same assets they had previously sold in order to cover their short positions.
The price seems to have difficulty maintaining a level above $50,000. It forms an important psychological level that is difficult to break through. Currently, the bitcoin price is just below this limit and breaks through it from time to time. It is still uncertain whether the price will actually leave the $50,000 mark.
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