Bitcoin broke out of a weeklong range as the Fed cut rates and $150 billion in new crypto market cap fueled a short squeeze, with altcoins outperforming BTC.
Summary
- Bitcoin briefly pushed to higher levels as the total crypto market cap jumped by around $150 billion in 24 hours, tracking growing appetite for risk.
- Traders have forecast a rate cut from the Federal Reserve at this week’s FOMC meeting, reducing the opportunity cost of holding non-yielding assets like BTC and altcoins.
- Data from CoinGlass showed forced liquidations of concentrated short positions once BTC broke through a narrow range, with altcoins outperforming on a percentage basis.
Bitcoin (BTC) traded higher on December 9 as the total cryptocurrency market capitalization increased by $150 billion in 24 hours, according to market data. The digital asset briefly reached high price levels before retreating during a session marked by announcements of institutional adoption, speculation about Federal Reserve rate cuts and forced liquidations of short positions.
Bitcoin changes in response to anticipated Fed decisions
PNC Financial Services Group, the eighth-largest U.S. commercial bank by assets, has launched direct Bitcoin spot trading for eligible customers through its proprietary platform, the bank announced. The service runs on Coinbase’s Crypto-as-a-Service infrastructure, extending access to cryptocurrencies to customers who previously lacked exposure on the platform.
The announcement states that the service integrates Bitcoin trading into the same interface that PNC’s institutional and wealth management clients use for stocks and fixed income, eliminating the need for separate exchange accounts.
Financial markets are pricing in an interest rate cut from the Federal Reserve at this week’s meeting, reducing concerns about the financial conditions of risky assets, market analysts say. Rate cuts reduce the opportunity cost of holding non-yielding assets such as Bitcoin and other cryptocurrencies compared to cash and short-duration bonds.
Major alternative cryptocurrencies also saw gains during the session as capital flowed into digital assets.
Forced liquidations of leveraged positions accelerated price movement, according to CoinGlass data. Bitcoin broke through a price range that contained the asset the previous week, triggering stop-losses and forced liquidations of short positions. The majority of liquidations over the past 24 hours consisted of short positions, according to CoinGlass data.
The cascade began when Bitcoin price rose above levels where open interest data indicated concentrated bearish positions. As these positions unwound, market makers bought hedges, pushing prices higher and triggering further liquidations. Mechanical buying took Bitcoin to higher levels before profit-taking by traders capped the advance.
Alternative cryptocurrencies outperformed Bitcoin on a percentage basis during the session, suggesting an increased appetite for speculative digital assets, market watchers noted.
