On the 20th of August, the cryptocurrency market, which was waiting for a sudden spike, was subjected to a very aggressive short squeeze.
As prices spiked sharply, traders who had been betting on prices to fall further were forced to exit their positions. In this, approximately $3.5 billion in leveraged cryptocurrency positions were liquidated between 20th and 21st of August, with the great majority of these positions being short positions, according to The Kobeissi Letter.
Of that, the wider liquidation wave reportedly affected over 190,000 traders. This comes as the price of Bitcoin saw an 8.5% increase in the past 24 hours.
For those unaware, Bitcoin [BTC] was moving sideways for a very long time and was struggling to break above the resistance level of $65k, and at press time, it was trading at $75,311.32.
Needless to say, the entire cryptocurrency market capitalization grew by about $280 billion in the past 24 hours.
Why is crypto going up today?
That said, besides the price action, the US Treasury’s decision to expand its purchases of longer-dated Treasury bonds through its current buyback program was another reason why the crypto market is up today.
Going ahead, the dropping US dollar index, which reportedly hit a three-month low, was another significant factor in the move. Since Bitcoin is typically valued in US dollars, a declining value of the dollar can help BTC and other risky assets and commodities.
What’s more?
Lastly, it was the regulatory factor that acted as a catalyst. On 19th August, President Donald Trump had reportedly invited regulators and executives from the cryptocurrency industry to the White House and urged Congress to enact a “fair version” of the CLARITY Act.
In this, Brian Armstrong of Coinbase believes that if the bill were passed with a “strong bipartisan vote,” the next bull market run would start in October.
Interestingly, within a day, the Crypto Fear and Greed Index went from fear to greed in a very short period of time. In fact, on 21st August, the index jumped to 72, up from 46.
Final Summary
- Due to the recent wider liquidation wave, over 190,000 traders were reportedly affected.
- Bitcoin’s price action and the CLARITY Act discussion with President Trump were various factors behind why is crypto going up today.
