Bitcoin’s price surged past $94,000, instigating over $300 million in short liquidations, marking the largest such event since October 2022. The Fear and Greed Index jumped from 29 to 72, indicating rising market optimism, while correlations with gold reflect broader economic themes. Key institutional developments may push Bitcoin’s market further, increasing prospects for higher valuations.
Early on Tuesday, Bitcoin’s price surged to over $94,000, resulting in a substantial unwinding of short positions and enhancing its upward momentum. Although it retreated slightly to $93,681 later that day, this represented a 5.7% increase. Approximately $300 million in Bitcoin shorts were liquidated within 24 hours, contributing to total crypto market liquidations of about $650 million, primarily from short positions.
According to Presto Research analyst Rick Maeda, this event marks the largest single-day Bitcoin short liquidation since October 2022, with over $156 million occurring on Bybit. Notably, Bitcoin futures on Bybit maintained funding rates below 2% this week, indicating that a crowded basis trade was likely absent; instead, it points to either directional bets or exploited cross-exchange price differences.
Maeda suggested that the liquidation event represents a classic short squeeze, whereby rapid price increases compel traders to close their short positions, thus further driving the price up. He highlighted the thin liquidity in the market relative to peak bull market conditions, which amplifies the upside volatility.
The correlation between Bitcoin and gold has been strong, with Bitcoin reaching new local highs alongside gold. WOO X’s head of research, Pat Zhang, noted the emergence of a risk-transfer mechanism in current markets, where negative macroeconomic indicators lead to a lower trend in U.S. equities, consequently affecting Bitcoin. During these periods, gold and associated instruments witness inflows that also impact Bitcoin positively.
The Bitcoin Fear and Greed Index, reflecting market sentiment, saw a sharp rise from 29 to 72 within a week, indicating a shift from ‘fear’ to ‘greed.’ Data from the decentralized prediction market Myriad shows users assign an 80% likelihood of the index staying above 55 by April 24. Furthermore, institutional activities play a role, such as reports of Cantor Fitzgerald planning a $3 billion Bitcoin acquisition, which may facilitate the transition of Bitcoin from retail investors to institutional hands, potentially pushing its price beyond $150,000.
