Bitcoin bulls have extended their reign despite concerns about unfavorable economic data. This comes just hours after the U.S Federal reserve hosted its latest meeting, revealing that rates would remain unchanged.
Rate cut decisions have historically had an impact on asset price movements including Bitcoin. This may explain the surge in shorts and therefore the heavy short liquidations that were in play following the FOMC meeting.
Roughly $95.7 million in short positions were liquidated in the last 24 hours, as opposed to $17.45 million worth of long liquidations. This imbalance confirmed that most participants in the derivatives segment anticipated a pullback.
Instead, BTC was up over 2.28% in the last 24 hours, pushing price as high as $99,412. The last time that Bitcoin rallied this high was on 21 February. This rally also suggests that bulls have been taking advantage of the opportunity for another leverage shake-down.
This recent rally has analysts wondering whether Bitcoin can maintain the momentum past its previous ATH or whether it will pull back. Especially considering that the latest push had the cryptocurrency in overbought territory once again.
No rate cut but the money printer is back on and here’s what it means for Bitcoin
The bearish expectations that set short sellers up for liquidation were mainly due to Powell’s latest announcement at the FOMC meeting. No rate cuts just yet as the economic situation still highlighted inflation risks.
However, more data shows that the FED is also adding more liquidity to the market. Recent reports revealed that the Federal Reserve just acquired treasury bonds worth $34.8 billion.
The development underscores a move by the FED to boost liquidity in the market and stimulate the economy. This may have offered confidence among investors hence BTC was able to cut through rate cut concerns.
Meanwhile, the FED’s recent treasury bond acquisition reflects the M2 money supply curve which has been pushing into new territory. It recently climbed to $21.76 trillion, which was notably higher than its previous peak in April 2022.
The rising M2 money supply signals that more liquidity has been flowing through the market. Assets like Bitcoin are thus poised to benefit both in terms of liquidity and market sentiment. These factors may have contributed significantly to the latest upside.
This latest upside also comes amid further cooling down in the tariff war situation. Bitcoin’s latest rally thus highlights a convergence of influences leading to more demand.
Also check out: Bitcoin Prospects In May Amid Shifting Economic Conditions
