Cryptocurrencies rose more this morning as bond rates fell and investors became more bullish.
Bitcoin (BTC-USD), Ethereum (ETH-USD), and Dogecoin (DOGE-USD) have all achieved large advances in the recent 24 hours.
As of 10:26 a.m ET today, Bitcoin stock (BTC-USD) was trading 6.6% higher, hovering at $20,777. Ethereum traded around 13.4% higher, while Dogecoin traded 10.4% higher.
Anything New for Bitcoin Stock ?
Cryptocurrencies have been battered this year due to the Federal Reserve’s relentless interest rate rises, which have also resulted in rising bond rates. However, bond rates have fallen this week, with the 10-year U.S. Treasury bill yield falling from around 4.2 percentage points earlier this week to slightly above 4 percentage points as of this writing.
This has boosted equities and cryptocurrencies, as investors expect that the Fed’s rate rises will soon come to a halt.
However, there have been indications of a large short squeeze, propelling recent advances in Bitcoin stock (BTC-USD) and Ethereum. According to CoinDesk, prominent exchanges have experienced some of the greatest short position liquidations since the middle of 2021.
Over the previous day, the main crypto exchange FTX recorded $745 million in short position liquidations across all tokens on its platform, while all major exchanges reported $908 million in short liquidations.
During a short squeeze, the price of a stock, or in this example, a cryptocurrency, rises as investors who are short the stock either decide or are forced to cover their position by purchasing shares of the asset, driving the price upward. However, not everyone is confident that this will lead to a lasting rebound or that the pressure on riskier assets is off.
“I’m still negative in the near term because we need more information on indicators that inflation is calming down,” Pablo Jodar of financial services company GenTwo told CoinDesk.
He continued: “Futures were already down after Alphabet’s results report yesterday. I won’t be shocked if bitcoin falls back to $19,000 in the next few days.”
So, What Now?
Bitcoin Stock (BTC-USD) and cryptocurrencies have undoubtedly had an eventful few weeks. After September, inflation statistics came in worse than predicted and showed no signs of easing; stocks and cryptocurrencies unexpectedly rose.
Perhaps markets are adjusting to the present situation and have become used to the Fed’s quick interest rate hikes, but I agree with Jodar that investors need to see clearer indicators of inflation peaking. The Fed will have to remain active until there is evidence that the rate of inflation is moderating.
The only good news is that, based on current predictions, the Fed may have completed almost all of its rate rises by the end of the year.
While the short future remains unknown, I continue to favor Bitcoin stock (BTC-USD) and Ethereum in the long run and have no interest in the meme currency Dogecoin owing to its lack of real-world use and the network’s lack of technological benefits.
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