Bitcoin surpassed $71,000 for the first time since early June
The cryptocurrency market has likely experienced its biggest short squeeze
Bitcoin rose to its highest level since early June / Photo: Unsplash/Dmytro Demidko
The price of Bitcoin rose above $71,000 during trading on August 20. This was the first time this had happened since June 1, according to data from CoinMarketCap. At the time of this publication, the cryptocurrency with the largest market capitalization was up 11% and trading at around $71,700.
Shares of the cryptocurrency exchange Coinbase rose more than 7% in premarket trading on Thursday, while Robinhood shares rose 5.4%. Shares of Strategy, the largest corporate holder of Bitcoin, gained nearly 10%, while Bitcoin miner Mara Holdings rose about 6%.
What's the matter?
Bitcoin's surge came after the U.S. Treasury announced it would double the maximum amount of long-term bonds it would purchase, according to Fortune.
“The market viewed this as a mild form of quantitative easing—a move that weakens the dollar and fuels growth in rarer assets that serve as a hedge against currency devaluation, such as Bitcoin,” — Matt Mina, senior strategist at research firm 21Shares, told Fortune.
A surge in demand for these assets forced investors to close out short positions (bets on a decline) worth approximately $1.5 billion by buying Bitcoin, according to Fortune. This included $700 million in purchases in a single minute: according to 21Shares, this is the largest short squeeze in Bitcoin’s history.
In addition, Bitcoin is being buoyed by the reduced likelihood of a rate hike by the U.S. Federal Reserve, Fortune added. Bitcoin exchange-traded funds in the U.S. attracted about $1 billion in the first two weeks of August, providing another source of demand for the cryptocurrency, the publication reports.
The rally could signal the end of the worst phase of the bear market for Bitcoin, noted Grayscale’s head of research, Zach Pandl. “We believe Bitcoin bottomed out at $58,000 earlier this summer [...] and now is an attractive time for investors with a long-term outlook to invest in Bitcoin and the entire crypto asset class,” he said (as quoted by Fortune).
Bitcoin also accelerated its rise following remarks by U.S. President Donald Trump on Wednesday, August 19, in which he called on Congress to pass a bill on cryptocurrencies. The meeting with Trump at the White House was attended by Coinbase CEO Brian Armstrong, Tyler and Cameron Winklevoss of Gemini Space Station, the co-CEO of Payward (which operates the Kraken cryptocurrency exchange), Arjun Sethi; and Vlad Tenev, CEO of Robinhood Markets.
This article was AI-translated and verified by a human editor
