- Market sentiment is currently in the ‘greed’ zone, prompting more traders to buy and pushing crypto prices higher.
- Short liquidations have dominated recent trading sessions, indicating strong bullish momentum.
Over the past 24 hours, the crypto market has experienced a significant drop in trading volume, down more than 30%.
However, despite this decline, the total market capitalization has increased slightly. So why is crypto rising despite lower trading volume?
Positive market sentiment increases crypto prices
Positive market sentiment is one of the main reasons behind the upward trend in crypto prices. According to data from Mint glassMarket sentiment has remained optimistic.
The Fear and Greed Index, a popular indicator of investor sentiment, is currently showing “greed.”
Source: Coinglass
This high level of greed often indicates increased buying activity, as more traders are driven by FOMO (fear of missing out).
This sentiment may answer the question of why crypto is rising today, as FOMO leads to more buying, pushing prices higher.
When the Fear and Greed Index points to greed, it usually indicates that traders are rushing to enter the market. This creates buying pressure, driving up the prices of key assets.
However, it is important to note that market corrections often follow these types of rallies, as FOMO can quickly turn into FUD (fear, uncertainty and doubt), creating volatility in the market.
Bitcoin’s price increase supports market growth
Another important factor explaining why crypto is rising is the positive price movement of Bitcoin, the largest cryptocurrency by market capitalization.
In recent days, Bitcoin has broken through the $63,000 resistance level and continued to rise, with the price remaining above $68,000.
During the last trading session, Bitcoin even reached $69,000, contributing to the overall increase in market capitalization.
Bitcoin’s price stability above key resistance levels provides a strong foundation for the entire crypto market, as its performance often sets the tone for other assets.
With Bitcoin maintaining its uptrend, other cryptocurrencies have followed suit, driving the market further higher.
Short liquidations drive prices up
An analysis of the crypto liquidation chart shows another reason why crypto is rising. In recent days there has been a noticeable increase in the liquidation of short positions.
As of October 8, short liquidations were approximately $71 million, while long liquidations were $41 million.
In the next trading session, both short and long liquidations were almost the same, around $28 million.
However, in the most recent session, short liquidations rose to nearly $80 million, compared to just $38 million in long liquidations.
Source: Coinglass
This trend of increasing short liquidations indicates that traders betting on price declines are being forced to close their positions as prices continue to rise.
As short positions close, buying pressure increases, leading to further price gains, making the market more bullish.
Why is crypto rising?
The crypto market’s upward movement can be attributed to several factors, including the positive market sentiment reflected in the Fear and Greed Index, Bitcoin’s strong price performance, and the liquidation of short positions.
Together, these elements drive the market higher even as trading volume decreases.
Although the current trend is positive, traders should be aware that rapid price increases could soon lead to market corrections.