Bitcoin Surges to 18-Month High Amid Short Squeeze Frenzy

Bitcoin is currently experiencing an 18-month high, and this surge is attributed to the looming decision by the US Securities and Exchange Commission (SEC) regarding the approval or denial of ETFs, with a six-day deadline set starting today. During the London trading session on Thursday, the price of Bitcoin briefly touched $36,700. Over the last month, Bitcoin’s value has seen a remarkable increase of about 31%, and over the past year, it has surged by an impressive 93%.

Interestingly, other prominent digital assets are following suit, with Ether recording a 20% gain in the last month. The cryptocurrency market is witnessing significant dynamics, and recent data indicates that approximately $50 million in liquidations occurred within a four-hour period during the early stages of trading in Asia. This led to a “short squeeze,” causing a rapid increase in prices.

Short selling, an uncommon condition that triggers a swift rise in the price of any asset, results in a short squeeze when the price suddenly surges, prompting short sellers to exit their positions and creating a domino effect of buying.

Contrary to the initial short squeeze, Bitcoin’s value surged to nearly $37,000 in the following hours. After a brief rejection, the asset experienced another price increase, reaching the same level late at night. Notably, this time, bullish momentum prevailed, propelling the cryptocurrency market valuation even higher.

The intensified buying pressure coincided with reports that the US Securities and Exchange Commission has engaged in discussions with Grayscale Investments regarding the details of the company’s application to convert its Grayscale Bitcoin Trust (GBTC) into a cryptocurrency spot ETF. The anticipation surrounding the SEC’s approval of one or more ETF applications is palpable within the crypto industry, as it is seen as a crucial milestone that could make technical asset investments more accessible to everyday investors.

Grayscale Investments has been in communication with the SEC’s Division of Trading and Markets and the Division of Corporate Finance since winning the case. The company’s application to launch an ETF directly carrying cryptocurrency assets faced initial rejection by the SEC, leading to a legal battle in US federal court. The court ultimately ruled that the SEC had refused “arbitrarily and capriciously,” compelling the agency to rescind its denial. This decision was finalized last month, prompting the regulator to reevaluate the application.

While the cryptocurrency market experiences these surges, Bitcoin miners find reason to celebrate as Bitcoin transaction fees reach 5% per month. Data from BitinfoCharts reveals that the average BTC transaction fee has risen to nearly $6 since November 7. Despite the increase in fees, the supply of Bitcoin remains limited, with long-term holders continuing to accumulate the cryptocurrency at an impressive pace.

Glassnode’s data further underscores a shift in market dynamics, indicating that the spending behavior of short-term holders suggests a change in the market’s character, particularly with prices surpassing the $30,000 mark. This observation aligns with key levels outlined in a quarterly outlook, adding an additional layer of significance to the ongoing developments in the cryptocurrency space. As Bitcoin continues to reach new highs, the market remains on edge, awaiting the SEC’s decision on ETFs and closely monitoring the evolving dynamics of the cryptocurrency landscape.