Bitcoin (BTC) continues to break ground as its price hit an all-time high of $80,000 over the weekend. This is a milestone record for the world’s leading cryptocurrency, as it shot up by 4% in a massive surge that saw its weekly gains rise over 16%, leaving most traders awestruck, after a rally that is being linked to two massive U.S. events: Donald Trump’s election as president and a 25-basis-point interest rate cut by the U.S.
These policy decisions of the Federal Reserve have been interpreted by market analysts as very strong bullish signs.
Over the weekend, this spike is significant not only in terms of the price jump but also in market dynamics. Generally, weekend trading tends to be less liquid as there are few institutional investors and professionals playing around in the market. For this reason, even relatively small trades tend to be much more impactful in prices, causing large swings.
Analysts point that the acceleration may be driven by retail investors, meaning further wider participation of small investors into the market. The rally in contrast to previous surges which largely occurred on the side of institutional players has traits of attracting more interest on the retail side which would imply continuation.
Profit-taking among the bitcoin traders is said to be modest, and according to Coindesk, there is still room for further growth in the rally. Traders who wagered against Bitcoin—those shorting the cryptocurrency—saw losses mount, with more than $280 million in short positions liquidated over the weekend. More than $103 million of that was tied up in Bitcoin shorts, with Ethereum (ETH) shorts around $70 million. Other cryptocurrencies like DOGE and SOL also witnessed wide liquidation, reflecting a larger market-wide rally.
Such massive liquidations of short positions are very unhealthy market conditions. Large liquidations are sometimes a sign that there is panic selling, although they can also be a sign of overreaction, and there is often overreaction before a turn.
One thing analysts may do is predict the short-to-medium-term outlook for Bitcoin. One finds themselves thinking there’s much more positive sentiment in the offing for the digital asset given the political and financial establishment in the U.S. continues to become more supportive of the cryptocurrency. Of course, caution should be tempered with warning in the event investor sentiment tips sharply to either side as the market begins to trade erratically.
For now, the $80,000 price point is something of a landmark in the quite volatile history of this cryptocurrency, and perhaps we’ll be looking into the coming weeks to see if the rally indeed has legs or if a correction soon becomes inevitable.