Bitcoin on the rise: What's behind its sudden growth and future prospects

Bitcoin on the rise: What's behind its sudden growth and future prospects

The recent jump in the price of bitcoin has generated a lot of attention in the cryptocurrency world. Analyst company Blofin Academy decided to take a closer look at the factors behind this surge and offers its predictions on what we can expect in the near future.

According to Blofin Academy, the rise in the bitcoin price is the result of growing optimism among investors, which is reflected in the slightly supportive activities of market makers. The first trading day after the New Year's holiday was very positive for the US equity and cryptocurrency markets, with bitcoin (BTC) and the S&P 500 ETF (SPY) showing strong growth momentum. This suggests renewed investor confidence despite high levels in the DXY index and US Treasury yields.

One of the key factors contributing to this recovery has been the easing of post-holiday risk aversion. For the SPY index, the hedging behaviour of market makers played an important role, leading to a steady recovery. On the other hand, bitcoin is showing different market dynamics. After the "cryptocurrency witch day", when trading was brisk, the positive gamma stock held by market makers decreased significantly, while the negative gamma stock remained high. This situation led to market makers adopting a "buy tops, sell bottoms" strategy for BTC, resulting in high implied volatility (IV) for bitcoin, while IV for SPY eased.

Investor optimism remains the main driver of bitcoin price growth. The interest in buying call options has steered the market towards a bullish bias. However, Blofin Academy warns that this bullish trend is concentrated on near-term options, which may limit the long-term sustainability of the price momentum.

Block traders now expect that bitcoin may hover around the $100,000 level in the near future, suggesting that many have been making credit purchases and sales in this area. Although short-term fluctuations are expected, medium- and long-term sentiment remains positive and investors maintain a bullish outlook on bitcoin's overall future.

So how will the market develop in the coming weeks and months? The answer remains uncertain, but with optimism and confidence among investors, bitcoin can continue to move forward. However, it is important to be mindful of the potential risks and volatility that the macroeconomic situation and the positions of derivatives traders may bring.

*This is not an investment recommendation.

Coingarage team