Bitcoin Surges to 18-Month High as Short Squeeze Fuels Bull Run

Bitcoin has surged to an 18-month high amidst reports of the US Securities and Exchange Commission (SEC) facing a six-day deadline to approve or deny ETFs starting today. During the London trading session on Thursday, Bitcoin briefly touched $36,700, reflecting a 31% increase in the last month and a notable 93% surge over the past year.

Notably, other prominent digital assets, including ether, have also experienced positive momentum, with a 20% increase in the last month. The market witnessed about $50 million in liquidations in a four-hour period during early Asian trading, triggering a “short squeeze” that propelled prices higher.

Short selling, an uncommon condition leading to a rapid asset price increase, resulted in a short squeeze as prices spiked, prompting short sellers to exit their positions and fueling a cycle of buying. Despite a brief rejection, Bitcoin rebounded, reaching nearly $37,000. This time, the bulls exhibited greater persistence, further elevating the overall crypto market valuation.

The buying pressure intensified as reports emerged of the US SEC engaging in discussions with Grayscale Investments regarding the company’s application to convert its GBTC into a crypto sports ETF. The anticipated approval of one or more ETF applications by the SEC is viewed as a significant milestone for the crypto industry, potentially facilitating broader access for everyday investors to technical asset offerings.

Grayscale’s interactions with the SEC’s Division of Trading and Markets and the Division of Corporate Finance have been ongoing since the case victory. Despite the existing Grayscale Bitcoin Trust relationship with the SEC, the agency initially rejected the ETF launch proposal involving direct exposure to crypto assets, leading to a federal court battle.

The court ultimately ruled in favor of Grayscale, stating that the SEC’s refusal was “arbitrary and capricious.” The court directed the agency to revoke its refusal, with the finalized ruling last month sending the application back to the regulator.

Meanwhile, Bitcoin miners are benefiting from a surge in transaction fees, reaching 5% per month. BitinfoCharts data indicates that the average BTC transaction fee has neared $6 since November 7. Despite the limited supply, long-term holders continue to accumulate Bitcoin at a rapid pace.

Glassnode data further underscores a shift in market dynamics, with short-term holders indicating changes in spending behavior as prices surpass the $30,000 mark. This level is deemed crucial in the quarterly outlook, aligning with the evolving landscape of Bitcoin and the broader cryptocurrency market.