Bitcoin is surging higher after weeks of consolidation. The cryptocurrency, currently trading for $11,430, is at its highest price since early September. In the past 24 hours, the cryptocurrency is up by approximately 5%, having traded around $10,900 on Thursday.
BTC’s strong surge higher is abnormal: just a day ago, the cryptocurrency was strongly underperforming altcoins.
Analysts on Twitter have commented that this is a sign that Bitcoin may outperform altcoins for a while. One fund manager in the space quipped that the “king is waking up and reminding everyone why it’s king.”
Bitcoin waking up and reminding everyone why it is king 🔥
— Pomp 🌪 (@APompliano) October 10, 2020
Analysts say that Bitcoin’s move higher is a result of spot market buying.
Mohit Sorout, a founding partner of Bitazu Capital, shared this chart below. It suggests that Bitcoin’s move higher is a result of spot market volume. This is evidenced by the premium on spot exchanges compared to futures exchanges. The premium is extremely slight buy shows which side of the market is driving price action.
— Mohit Sorout 📈 (@singhsoro) October 10, 2020
During this move higher, though, there was $38 million worth of short-side liquidations on BitMEX alone. This indicates that there may be some derivatives element to Bitcoin’s move higher.
Open interest has yet to recover in wake of this move, suggesting that investors are hesitant to short the ongoing rally. Respectively, funding rates have begun to inch higher, corroborating this assertion.
Stimulus News Likely Driving Bitcoin Higher
Analysts believe that news around potential fiscal stimulus is driving capital into Bitcoin.
Mike McGlone, senior commodities analyst at Bloomberg, recently made the following comment on how fiscal policy can drive Bitcoin in the coming months:
“A potential Biden presidency should shine favor on further appreciation in the price of #Bitcoin. New leadership may change the hands-off policy of the Trump admin. – to the detriment of the broader crypto market – and nudge Bitcoin toward the mainstream, improving ETF chances.”
On a short-term basis, it was recently revealed that stimulus talks are continuing in Washington, D.C.
It was revealed that there currently is a $1.8 trillion stimulus bill in talks, which is below the $2.2 trillion bill that was being floated a week back. Whatever the case, the U.S. dollar is diving lower on these continued discussions.
As a result of these discussions, Bitcoin is gaining traction. The news that Square has bought $50 million worth of BTC for its balance sheet likely is helping.