Bitcoin Surges Towards $27k As Short Squeeze Accelerates

Update (1715ET): It seems like only yesterday, Bitcoin was trading at $24,000… And now, as short liquidations accelerate, the leading cryptocurrency is rapidly approaching $27,000…

As CoinTelegraph notes, according to data from Bybt.com, more than $131 million worth of Bitcoin futures contracts were liquidated in the last 24 hours…

As long as the derivatives market continues to see an increase in sellers, the probability of more short squeezes in the near future remains high.

Additionally, popular trader Philip Swift, for example, noted that the number of big sellers has actually subsided during the current rally.

“Large players, >1000btc wallets, have calmed down for 1st time in this huge run-up,” explained Swift.

“We can see the number of >1000btc wallets decrease rapidly over the past week or so. Whereas we can see the 1-10 BTC wallets (mass retail) have continued to steadily climb in recent weeks.”

He added: So quick topline analysis suggests a lot of retail buyers are now coming in over the Christmas break. Potentially due to:

a) hearing about BTC from fam/friends during the holidays now it is making new ATH’s.

b) plus some potential switching out of XRP/other alts.

2020 will go down as a landmark year for Bitcoin. While many institutions have been clamoring for years that the ‘institutions are coming,’ this year finally delivered on those revelations

*  *  *

Bitcoin continues to surge higher…

Source: Bloomberg

…topping $25,000 for the first time this morning, as the holidays do nothing to dampen demand for the leading cryptocurrency…

Source: Bloomberg

However, the love is not being shared across the rest of the crypto space with Ethereum now at its lowest relative to Bitcoin June

Source: Bloomberg

And as Bitcoin’s price rises, so does its total capitalization, which, as CoinTelegraph’s Joseph Young points out,  now exceeds the market cap of Visa at $460 billion…

image courtesy of CoinTelegraph

Visa, the financial services giant, is valued at $460.06 billion according to Yahoo Finance. As of Dec. 26, Bitcoin is comfortably hovering above $462 billion.

But is Visa and Bitcoin an apt comparison?

Bitcoin is essentially a peer-to-peer software protocol while Visa is a for-profit corporation. Some may argue that a direct comparison between the two is not apt as they are fundamentally different.

But Bitcoin surpassing the valuation of Visa is symbolic above all else and the current market cap of Bitcoin would theoretically make it the thirteenth-largest company in the world.

Meanwhile, throughout 2020, the institutional interest in Bitcoin has been surging. At a point where the institutional demand for Bitcoin continues to increase exponentially, the surpassing of Visa’s market cap could further boost the confidence around Bitcoin among institutions.

More institutions and accredited investors have been gaining exposure to Bitcoin through Grayscale and the CME Bitcoin futures market. The assets under management of Grayscale is nearing $17 billion, as the open interest of the CME Bitcoin futures market consistently remains above $1 billion.

Visa has also shown more enthusiasm toward crypto in recent months, following Square and PayPal’s support for Bitcoin.

For instance, Wirex, the crypto Visa debit card issuer, became a principal member of Visa in Europe. Cuy Sheffield, the senior director and head of cryptocurrency at Visa, said:

“Digital currencies have the potential to extend the value of digital payments to a greater number of people and places. We’re excited to work with innovative Fintechs like Wirex and enable their customers to use digital currencies at more than 61 million merchants on the Visa network.”

On-chain data hints at where BTC is heading next

In the near term, traders and on-chain analysts say that Bitcoin’s trajectory remains optimistic.

Analysts at Intotheblock identified $23,069 and $23,377 as the key support levels for BTC in the near future. They wrote:

“Bitcoin has been able to sustain above $23,000. The IOMAP indicator supports that premise as is showing a strong level of support at the range between $23,069 and $23,377.1, where almost 900 thousand addresses previously acquired 796 thousand $BTC.”

Bitcoin support levels based on on-chain data. Source: IntoTheBlock

As long as Bitcoin stays above the critical support areas, traders anticipate the cryptocurrency market to see a broader rally.

Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, expects the total cryptocurrency market capitalization to soon break its all-time high of around $780 billion. He said:

“The total #crypto market capitalization is looking extremely bullish as it has been testing the all-time high region. Levels to watch are $550 and $450 billion. Any of these regions are buy dip opportunities. If these holds, next run will bring the market above ATH.”

Finally, we note that while Bitcoin’s surge is surprising to many, it is in fact merely catching up to the stock-to-flow model’s estimate of fair-value

Source

As Galaxy Digital CEO Mike Novogratz said on Thursday, the Bitcoin bull market has proven resilient to the recent wave of anti-crypto rhetoric coming from Capitol Hill: “It tells you about how powerful this bull market is […] They are throwing lots at the system, and it’s not actually impacting it.”

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