Bitcoin Surges Above $37,000, Triggering Short Squeeze
Bitcoin experienced a significant surge in price, surpassing the $37,000 mark in the morning trading session in the United States. This rally was preceded by a similar surge in Asian trading hours, which led to a “short squeeze” phenomenon that propelled prices even higher. During a four-hour period, nearly $50 million worth of bitcoin shorts, which are bets against the price rising, were liquidated. This forced short sellers to cover their positions, further driving up the price. Exchanges with a strong presence in the Asian market, such as BitMEX, OKX, and Binance, witnessed a significant number of positions being exited.
The bullish momentum of Bitcoin can be attributed to reports that emerged late on Wednesday. The U.S. Securities and Exchange Commission (SEC) has initiated talks with Grayscale, a fund manager, with whom it has been engaged in a legal battle. The dispute revolves around the conversion of the Grayscale Bitcoin Trust into a spot ETF. The news of these discussions has generated optimism among investors, who anticipate the approval of a spot bitcoin ETF in the United States. As a result, shares of U.S. crypto-centric companies experienced an upward trend in pre-market trading. Coinbase saw a 4% increase, while MicroStrategy, a software developer holding over 150,000 BTC, witnessed a rise of almost 5%. Mining firms Marathon and Riot also experienced gains of around 9.8% and 6% respectively. However, Robinhood showed more modest gains of 2.5% after suffering a 14% drop in share price on Wednesday due to disappointing revenue and trading activity reports.
In other news, Standard Chartered’s venture arm and SBI Holdings have announced the formation of an investment company with $100 million backing. This company aims to target crypto startups and will be established in the United Arab Emirates (UAE). It will focus on firms operating in market infrastructure, risk and compliance, decentralized finance (DeFi), and tokenization. Standard Chartered has recently shifted its crypto activities to the UAE, selecting Dubai as the jurisdiction to safeguard digital assets for institutional clients starting in the first quarter of 2024. The decision was made due to the region’s mature regulatory structure compared to other jurisdictions.
Today’s chart highlights the performance of the dollar index since early July. The index measures the value of the U.S. dollar against major fiat currencies. After reaching a peak above 107 in early October, the index has since pulled back to 105.50. This decline is seen as a positive sign for the crypto market.
In conclusion, Bitcoin’s surge above $37,000, triggering a short squeeze, has been a significant development in the crypto market. The ongoing discussions between the SEC and Grayscale have also generated optimism among investors, leading to positive trends in the shares of U.S. crypto-centric companies. Furthermore, the establishment of an investment company in the UAE by Standard Chartered and SBI Holdings reflects the growing interest in crypto startups. The decline in the dollar index is also seen as a positive indicator for the crypto market’s performance.