Trading Volumes Surge and Whales Pile In Whats Driving Bitcoins Rise

Why is the cryptocurrency market rising?
This week, the cryptocurrency market experienced a sudden crash influenced by multiple factors, including the sell-off by Jump Trading, ETF fund flows, the U.S. presidential election, and escalating tensions in the Middle East, with Bitcoin (BTC) prices temporarily dipping below $50,000. However, following the weekend massacre, Bitcoin’s price rebounded significantly yesterday (8th), climbing back above the $60,000 mark.
In the past 24 hours, Bitcoin has risen by 6.4%, with its price settling at $61,223; Ethereum (ETH) also surpassed $2,600, rising 8.8% in the same timeframe.
Strong performance in the U.S. labor market data
The rapid price recovery is closely tied to the latest U.S. labor market data. According to data released by the U.S. Department of Labor on August 5, the number of first-time unemployment claims in the week from July 28 to August 3 decreased from 250,000 the previous week to 233,000, which is below economists’ expectations of 240,000.
This data indicates that the U.S. labor market remains robust and alleviates concerns about an economic recession, thereby weakening expectations for a significant interest rate cut by the Federal Reserve in September.
Market leverage short position liquidation
Another major driving force behind the rise in Bitcoin prices comes from the liquidation of leveraged short positions in the cryptocurrency market.
In the past 24 hours, over $114 million in short positions have been liquidated, indicating that bearish pressure in the market is waning. Meanwhile, the number of open contracts in Bitcoin futures has also increased, rising from $26.65 billion the previous day to $27.01 billion. This suggests that market risk appetite for Bitcoin is on the rise, with investors beginning to re-enter the market.
Short: Refers to a trading strategy where one sells first and buys later to profit from the price difference.
Open contracts: Refers to derivative contracts that have been bought or sold but have not yet been settled. The open interest can be seen as the funds still in the market.
Bitcoin whales accelerate accumulation, exchange balances reach a five-year low
As the cryptocurrency market experienced a “one-week limited sale,” Bitcoin whales swiftly entered the market to increase their holdings when prices fell below $50,000.
According to data from market analysis firm Santiment, wallet addresses holding 10 to 1,000 Bitcoins reached their highest trading levels since early April on August 5 and 6, indicating that these large holders took the opportunity to accumulate significant amounts of Bitcoin during the price plunge.
This is a positive signal, as the continuous accumulation by Bitcoin whales reflects a bullish sentiment among this group of investors towards the cryptocurrency market.
Additionally, data from CryptoQuant indicates that Bitcoin balances on exchanges have reached a five-year low, with only 2.68 million Bitcoins remaining. This suggests that an increasing number of investors are transferring their Bitcoins to self-custody wallets, reducing the intention to sell, and anticipating that market prices will continue to rise.
Reference:
cointelegraph,
coindesk