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- The crypto market makes a bullish run as altcoins continue the upward trajectory.
- According to a crypto analyst, five main factors have triggered this rally.
The past couple of days have seen the crypto market recording significant gains with Bitcoin (BTC) up by 11 percent, Cardano up by 9 percent, and Polygon up by 7 percent in the last 24 hours. While there could be several plausible reasons for this development, an analyst has compiled five main factors setting the market up on an upward trajectory.
The first, according to the analyst, is the anticipation surrounding the possible approval of BlackRock’s spot Bitcoin ETF application. The anticipation was heightened by the increasing rumors of BlackRock iShares Bitcoin Trust’s listing on the Depository Trust & Clearing Corporation (DTCC).
This was confirmed by Bloomberg’s Eric Balchunas who claimed that the iShares Bitcoin Trust would operate under the ticker $IBTC. Interestingly, Bloomberg’s James Seyffart clarified that it could take days, months, or years for this to materialize. Scott Johnsson, a finance lawyer from Davis Polk also commented on this, fueling speculations and triggering more demand for Bitcoin.
So two things caught my eye from the latest iShares (Blackrock) S-1 amendment: They’ve obtained a CUSIP in preparation for a launch. They may be looking to seed with cash this month.
The analyst also links the current rally to the Grayscale recent legal victory over the US Securities and Exchange Commission. It can be recalled that the asset manager filed an appeal after the Commission rejected its spot Bitcoin ETF application. According to the court, the SEC’s decision was “arbitrary and capricious.” In this case, the Commission was compelled to review its decision, increasing the odds of a possible ETF approval.
Other Reasons for the Crypto Rally
The third reason for this market rally is the fact that the Bitcoin short sellers are squeezed. According to CoinGlass data, $161 million in BTC futures shorts were liquidated just yesterday. So far today, more than $35 million has been liquidated. Joe Consorti, a market analyst, also noted that there was an accumulation of futures positions when Bitcoin was trading at $31k. This imitated the accumulations when the asset was trading at $25k and $30k in June. Julio Moreno, CryptoQuant’s head of research also admitted that the current rally was triggered by short sellers.
The surge in Bitcoin’s price has been primarily fueled by short sellers having to cover. As prices soared past $31K, we observed a notable drop in Open Interest. It’s intriguing to see a rally that doesn’t primarily start with everyone going long.
Another catalyst of the market behavior reportedly stems from the difficult landscape of the options market. Alex Thorn, the Head of Firmwide Research at Galaxy recently reported that $20 million of delta needs to be purchased by market makers for “every subsequent 1 percent move higher” at $32.5k.
Finally, the introduction of TWAP buyers coupled with Coinbase premium has played a serious role. This was explained by a crypto analyst identified as Skew.
There’s a discernible TWAP buyer that has been active since Bitcoin hit around $30.6K. The impact of this TWAP buying on the price trajectory seems more pronounced this time around.
Based on the rate of growth, Bitcoin (BTC) could likely hit $40k over the coming days.
