The last 24 hours have been particularly turbulent in the cryptocurrency market, but this time it looks like everything is in favor of the bulls.
Bitcoin’s price surged above $41K for the first time since January 21st, and the whole market is in the green. Therefore, we’re taking a look at four possible reasons for which the positive move was triggered.
Reporting season is over
It should be noted that Bitcoin and the traditional stock market have been closely correlated for some time. As such, what happens on Wall Street has impacted the cryptocurrency market for some time, and it is essential to be aware of the macroeconomic factors that influence stocks.
The majority of the tech giants and other big names in the legacy markets are done filing their financial reports for the last quarter of 2021. These are important catalysts for considerable fluctuations in the markets.
For example, just a few days ago, CryptoPotato reported that Meta (formerly known as Facebook) filed its fourth quarter 2021 report and revealed a loss of daily active users for the first time in history. In response, their stock price fell more than 26% in the after-hours trading session following the filing.
Now that these reports are through, it’s perhaps safe to assume that the markets would be less volatile, devoid of massive catalysts of the kind, taking away some of the uncertainty off the table.
US jobs reports beat expectations
Recent figures revealed that the United States created almost half a million new jobs in January alone, despite the spread of the Omicron variant which tends to lead businesses to short-staffed jobs.
This was reported by the US Labor Department’s Bureau of Labor Statistics on February 4th. The unemployment rate increased slightly from 3.9% to 4% over the same period.
The report beat the expectations of economists who predicted just 150,000 new jobs according to a Dow Jones survey. In addition, the length of time people remain unemployed has also decreased:
“In January, the number of persons jobless less than 5 weeks increased to 2.4 million and accounted for 37.0 percent of the total unemployed,” reads the report. “The number of long-term unemployed (those jobless for 27 weeks or more) declined to 1.7 million.”
Now, it’s again important to keep the bigger picture in mind, as more jobs tend to translate into lower inflation – something that has been widely advocated for some time. Just for reference, the price of BTC dipped slightly after the report and then exploded to a high not seen in over two weeks.
$220 Million in Short Liquidations
Data from CoinGlass reveals that over the past 24 hours, the market saw a whopping $220 million worth of liquidated short positions across major exchanges including Binance, OKEx, FTX, Bybit, Huobi, BitMEX, and so forth.
In total, more than 80% of the liquidations over the past day were in short positions which triggered what is known as short compression – a market condition where the price rises, triggering more and more liquidations which, in turn, trigger new upward momentum.
A Correction Was Due
The price of Bitcoin has been on a massive downtrend in the past couple of months and there haven’t been any significant positive corrections for quite a while.
Yesterday’s daily market candle is the biggest green candle since the decline that took place on November 10 – the day BTC also marked its all-time high price.
It’s now interesting to see whether or not this will be a confirmed breakout of the downtrend and whether or not the market will start recovering. The upcoming weekly close tomorrow will be critical but it’s still particularly important to remain very careful in the upcoming days as volatility is likely to be enhanced.
