Bitcoin rose 11.81% since the December 1 low of $84,000 to reach the $94,000 resistance level.
Such a dramatic performance in less than 48 hours was unexpected. It certainly attracted many market participants, who expected the downward trend to continue.
CoinGlass data showed that Bitcoin saw $223 million in liquidations in the last 24 hours, of which $209.5 million were short liquidations.
On the crypto market, $492.11 million was liquidated in one day, of which $418.53 were short positions.
Why exactly is crypto rising this week?
Make no mistake: the long-term trend remains bearish. Market sentiment has also been pessimistic in recent weeks. Bitcoin’s recent price move past $92,000, towards the resistance at $94,000, was a significant development.
Bitcoin leads, and crypto assets largely follow. Therefore, exploring the reasons for a BTC rally will lead us to why crypto is on the rise today.
Bitcoin ETF flows turned positive on November 25 after heavy outflows. Since then, the price has remained positive, a sign that sellers are losing their grip for the time being.
The tighter policy implemented by the Bank of Japan has had a negative impact on the market. US investors were more cautious, which explained the losses until last week.
At the same time, $88,000 marked a critical support level, the US newspaper said CVDD channel.
An AMBCrypto report indicated that the latest rally was likely driven by the search for liquidity. An earlier report had predicted this was a possibility, and Bitcoin had a chance to race towards $95,000.
Another factor was that the US Federal Reserve ended quantitative tightening (QT) on December 1.
It took its first steps toward liquidity expansion, which could be the first step toward a crypto rally.
A $13.5 billion injection in the banking system likely influenced crypto market sentiment and pushed Bitcoin higher.
The BOJ tightening led to sell-offs in Bitcoin and the broader crypto market in March 2024, July 2024, and January 2025.
On the other hand, the probability of an interest rate cut by the US Federal Reserve by 25 basis points in December amounts to 89.1%. It is difficult to estimate where prices will go next, but expect increased volatility for now.
Final thoughts
- A 12% Bitcoin rally since Monday, while impressive, does not change the longer-term bearish trend.
- Macro developments pulled the crypto market in both directions and could create very volatile conditions.