Bitcoin and other major cryptocurrencies suddenly soared on Tuesday, increasing in value ahead of the findings of Wednesday’s Federal Reserve meeting, which are widely expected to result in a third interest rate cut. And that led to the liquidation of a growing number of short positions – a rarity in recent times.
Bitcoin was recently trading above $94,400, the highest price recorded since mid-November, according to price aggregator CoinGecko. The price of the leading cryptocurrency was hovering around the $90,000 mark before Tuesday morning’s peak, with the coin now up 5% over the past 24 hours. It is now up around 4% for the week.
However, Altcoins are faring even better, with Ethereum extending its recent rebound with a daily spike of 8% to reach a recent price of $3,359, pushing its weekly gain to over 16%, the largest spike among the top 10 cryptocurrencies during this period.
XRP, meanwhile, is up about 5% on the day to $2.17, Solana is up 6% to $144, and Dogecoin is up 6% to $0.15.
Crypto traders betting on the future performance of major assets are being hit by selloffs on Tuesday, and while most major selloff days in recent months have focused on long positions hit by falling prices, it’s primarily shorts that are being hit on this day.
According to CoinGlass data, more than $376 million in positions were liquidated over the past day, including $297 million in short positions. Bitcoin currently dominates the crypto carnage, accounting for around $153 million in positions hit, followed by Ethereum at $110 million.
What explains Tuesday’s price increase? The Federal Open Market Committee (FOMC) began its final meeting on Tuesday, which is expected to result in the third rate cut of the year when the meeting concludes on Wednesday. According to CME FedWatch data, interest rate traders currently forecast a nearly 90% chance that the Fed will make another 25 basis point rate cut.
Bitcoin and other risk assets generally perform well in a low interest rate environment, although Tuesday’s rise in cryptocurrencies could mean traders are buying the rumor and considering selling the news on Wednesday.
Users of Myriad, a market prediction platform operated by DecryptDastan’s parent company, is increasingly optimistic about the prospect of Bitcoin returning to a price of $100,000 before it crashes to $69,000, giving a chance of almost 80% at the time of writing. This mark has climbed 9% over the past day.
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