Bitcoin made a historic jump above $79,000 for the first time, amid a strong buying spree over the weekend that saw $280 million worth of sell orders liquidated in the cryptocurrency market.
Bitcoin is up 4%, extending its weekly gains to more than 16%. The rally came on the back of two major events: Donald Trump’s victory in the US presidential election and the US Federal Reserve’s 25 basis point interest rate cut. Traders generally see these two events as supportive of Bitcoin’s price.
The phenomenon of “weekend pumps” is a common phenomenon in the cryptocurrency markets, where prices usually see significant increases during the weekend. The main reason for this phenomenon is that trading volumes drop significantly during this period, as many institutional investors and professional traders are less active.
Low market liquidity leads to increased price volatility, meaning that relatively small buy and sell trades can have a significant impact on price movement. Therefore, any minor news or event can cause sharp price swings over the weekend.
In addition, CoinDesk analysis indicates that current profit-taking in the Bitcoin market is still limited compared to previous periods of sharp increases. This indicates that demand for Bitcoin remains strong and that there may be room for additional gains.
In contrast, short-selling (short speculating) positions in the cryptocurrency market suffered massive losses of more than $280 million over the weekend. This is an unprecedented high, and reflects the intense pressure on sellers. Nearly $103 million in short-selling positions in Bitcoin alone were liquidated, in addition to $70 million in Ethereum.
