Bitcoin’s recent price spike above $45,800 has led to over $73 million in short liquidations, while tokens from blockchain platforms Arbitrum and Optimism have recorded significant price rallies over the past month, trading near their all-time highs.
Bitcoin’s Surge and Its Impact on the Crypto Market
In the last day, Bitcoin achieved a peak for the year, crossing the $45,800 mark, fueled by the increasing likelihood of the SEC endorsing spot bitcoin ETFs in the US.
Subsequently, it has mildly decreased, valued at $45,353 as of 7:00 a.m. ET. This climb has influenced not just Bitcoin but also significant alternative cryptocurrencies. For example, Solana and ether, associated with the Solana blockchain and Ethereum, respectively, reported upticks of 10% and 4%.
This upsurge has provoked notable market liquidations, particularly impacting short positions on centralized trading platforms. The resulting fluctuations led to Bitcoin positions worth more than $81 million being liquidated, predominantly shorts totaling $73.2 million.
Widespread Liquidations Amidst Crypto Market Fluctuations
In the past 24 hours, the cryptocurrency domain has seen extensive short position liquidations, with CoinGlass reporting the value at over $133 million. This accounts for part of the broader $177 million liquidations occurring on various centralized trading venues.
In derivative markets, a liquidation event happens when a trader’s stake is involuntarily closed because their funds are inadequate to cover the losses incurred.
This scenario typically unfolds when market directions oppose the trader’s stance, consuming their initial margin or security deposit. These occurrences are frequent in the fluctuating cryptocurrency markets, where swift value shifts can trigger immediate and substantial economic repercussions.
Prospects of Spot Bitcoin ETFs Elevate Crypto Valuations
On Tuesday, the worldwide market valuation for cryptocurrencies reached $1.84 trillion, a 5.26% rise within 24 hours. This growth is predominantly credited to the speculation that the SEC will soon sanction multiple spot bitcoin ETFs, a movement that might propel the entire crypto market.
Recently, a Reuters weekend report intimated that the SEC might start informing ETF applicants about the status of their submissions by Tuesday. This comes before the SEC’s deadline on January 10 to conclude on the spot bitcoin ETF suggested by Ark Investments and 21Shares.
Additionally, the report mentioned that other leading asset management firms such as Valkyrie, Bitwise, WisdomTree, Franklin Templeton, BlackRock, VanEck, and Invesco could also be apprised of the outcomes regarding their ETF applications by this week’s Tuesday or Wednesday.
The anticipated authorization of these ETFs is under keen market surveillance, as their approval could significantly steer the direction of the entire crypto ecosystem.