Bitcoin (BTC/USD) price made a bullish breakout on Thursday and moved above the key resistance level at $24,305, the highest point this year. In all, the coin has surged by about 60% from its lowest level in 2022.
Shorts liquidations rising
Bitcoin price jumped in a week that the alternative should have happened. As we wrote in this article, the US published strong inflation numbers on Tuesday. The headline consumer price index (CPI) dropped to 6.4% but rose on a month-on-month basis.
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And on Wednesday, the US published another set of strong economic numbers as retail sales popped by 3% in January. Therefore, these numbers mean that the American economy is doing well and that the Fed has more room to keep hiking. As such, that would have been a bearish catalyst for Bitcoin and other cryptocurrency prices.
The main reason why the BTC price rose is that short-sellers have started to liquidate their positions again. According to CoinGlass, shorts liquidated positions worth $155 million on Wednesday, the highest figure since the first week of January. This compared to longs liquidation of just $14 million. In most periods, BTC price tends to rise when shorts are liquidating their positions.
Binance likely settlement with the SEC
The other reason why the Bitcoin price jumped is the likelihood that Binance, the biggest exchange in the world, will reach a settlement with the SEC. The SEC has been investigating Binance for money laundering actions and for offering its services illegally in the US. American regulators are also likely to intervene in the acquisition of Voyager Digital’s assets.
In an interview with the WSJ, Binance’s Chief Strategy Officer said that he expected a settlement. In corporate litigation, a settlement is usually preferred compared to a long period of court proceedings. This is notable since Binance is the biggest player in the crypto industry.
Bitcoin price crossed key hurdle
By staging a bullish breakout, Bitcoin price managed to clear a key hurdle that it struggled to move above this month. And since volume appears to be rising, this is likely not a false breakout. Also, BTC seem to have formed an inverted head and shoulders pattern. This pattern is not well-defined though.
Therefore, there is a possibility that Bitcoin will continue rising as buyers attempt to move past $25,000. A break above that level will see it rise to $25,209, the highest point on August 13.
Source: https://invezz.com/news/2023/02/16/2-reasons-why-bitcoin-price-made-a-spectacular-comeback/