Bitcoin price is up on Jan. 9, and a market-wide rally in crypto prices has some investors hopeful that the year-to-date high at $17,348 is a sign that BTC has bottomed.
After th continuation of last week’s rally in equities markets, a cooling U.S. dollar index (DXY) and positive developments in the cryptocurrency market have translated to Bitcoin remaining above the key $17,000 level
A primary catalyst for the rally appears to be the positive economic data which showed nonfarm payrolls beating expectations. Equities traders are also reacting by driving prices higher on the hopes that the positive data spurs less aggressive Federal Reserve interest rate hikes at the Federal Open Market Committee (FOMC) meeting on Feb. 1.
Daily cryptocurrency market performance. Source: Coin360
The stock market is also flashing green, with the Dow and S&P 500 posting their best weeks since November 2022. As reported by Cointelegraph, Bitcoin’s price action remains closely correlated to U.S. equities and today’s rally is no exception to the trend.
Here are a few reasons why Bitcoin price is up today.
Bitcoin open interest tilts toward longs after record short liquidations occur
Since Bitcoin price rallied to $18,000 on Dec. 14, 2022, the open interest on BTC futures contracts has been surging. The price has not recovered from that December high, but it has gradually risen since the Dec. 19 monthly low at $16,476. Data from Coinglass shows that 58% of open BTC options are long rather than short.
Bitcoin short and long ratio. Source: Coinglass
If inflation has peaked, there is the possibility of the Federal Reserve pivoting from aggressive interest rate increases. Many traders agree that if the Federal Reserve were to pivot on its current policy of quantitative tightening and interest rate hikes, BTC price could surge.
Short liquidations directly help to push Bitcoin price higher by forcing automated buying. On Jan. 8, 2023 $130.25 million in BTC shorts were liquidated, the highest amount since Nov. 9 and this may have helped in boosting Bitcoin price.
Bitcoin liquidations. Source: Coinglass
The FOMC begins meetings on Jan….