Bitcoin Surges Past $90,000 Before Reversal, Triggering Liquidation Wave

Bitcoin Surges Past $90,000 Before Reversal, Triggering Liquidation WaveOn November 13th, Eastern time, Bitcoin's price continued to surge, breaking through the $90,000 mark for the first time, marking a year-to-date gain of over 110%. However, just three days later, Bitcoin's price fell back below $88,000

Bitcoin Surges Past $90,000 Before Reversal, Triggering Liquidation Wave

On November 13th, Eastern time, Bitcoin's price continued to surge, breaking through the $90,000 mark for the first time, marking a year-to-date gain of over 110%. However, just three days later, Bitcoin's price fell back below $88,000. As of this writing, Bitcoin is trading at $9,041 per coin.

It's worth noting that as Bitcoin breached $90,000, the 24-hour trading volume of major cryptocurrencies like Bitcoin, Ethereum, and Binance Coin dropped by nearly 40%, exhibiting a "divergence between price and volume." This often signals a strong presence of investors waiting on the sidelines.

Meanwhile, according to Coinglass data, within the 24 hours following Bitcoin's breakthrough to $90,000, a total of 252,900 traders were liquidated, resulting in a staggering $857 million in losses. The largest single liquidation occurred on the Binance-BTCUSDT trading pair, amounting to $32.13 million. The total Bitcoin liquidation amounted to $253 million, with $119 million from long positions and $134 million from short positions.

Looking back at Bitcoin's trajectory, since November 6th, it has been on an upward climb, fueled by positive news such as Trump winning the US presidential election, the Fed cutting interest rates, and continuous inflows into Bitcoin spot ETFs. Data shows that Bitcoin has been on a relentless ascent since the US election results were announced, breaking historical records almost daily. However, as prices have risen, Bitcoin has also exhibited extreme volatility.

Regarding the recent rapid surge in Bitcoin's price, some analysts attribute it to the anticipated Fed rate cut. On November 13th, the US released its October CPI data, revealing a year-over-year increase of 2.6%, aligning with expectations. Traders significantly increased their bets on a December rate cut by the Fed, with several major institutions also expressing their anticipation of a rate cut in December. Following the data release, multiple Fed officials delivered speeches. Fed official Kashkari stated that inflation is progressing in the right direction, but they haven't observed any clear inflationary risks. The greater risk lies in the potential of the economy entering a recession.

Additionally, some analysis suggests that the recent Bitcoin upswing has been influenced by Tesla CEO Elon Musk. On November 12th, Trump announced that Musk and Vivek Ramaswamy would co-lead the proposed "Department of Government Efficiency" upon his presidential inauguration. The market's anticipation of a potential easing of cryptocurrency regulations propelled Bitcoin's price upward.

However, as a highly volatile asset, Bitcoin's inherent characteristics expose it to risks such as uncertainties in regulatory environments across nations, as well as technical and security issues. Experts urge caution, noting that Bitcoin trading hasn't been legalized in China; incidents like hacker attacks, technical vulnerabilities, and operational errors could lead to financial losses and market instability.

Further analysis of the above:

• Bitcoin's surge past $90,000 reflects the market's optimistic outlook on future economic prospects and its continued bullishness on cryptocurrencies.

• However, the divergence between price and volume, along with liquidations totaling $857 million, indicate a division in market sentiment, with some investors remaining cautious.

• The anticipated Fed rate cut and the appointment of Elon Musk have contributed to the rise in Bitcoin's price.

• It's crucial to acknowledge that Bitcoin trading is not yet legal in China, so investors should approach their investments with prudence and be mindful of the associated risks.

In conclusion, Bitcoin's price movements are inherently unpredictable. Investors should maintain composure, engage in rational investment practices, and remain cognizant of the inherent risks.