A lot has happened in a relatively short time. In the past seven days alone, Bitcoin’s price exploded to a 3-month high, reaching levels not seen since January 2.
This contributes to an overall increase of about 14% as Bitcoin traded above $47,000 earlier today. The total cryptocurrency market cap has risen by a staggering $120 billion in the past 24 hours, and we take a closer look at three possible reasons for the recent gains.
Buy Terra Bitcoin
It goes without saying that Do Kwon’s Terra appears to be the main catalyst for Bitcoin’s recent price surge as their BTC purchases keep rolling in.
As CryptoPotato reported earlier last week, Do Kwon – the co-founder and CEO of Terraform Labs – the company behind the Terra protocol – revealed intentions to buy as much as $10 billion worth of Bitcoin over time. While many didn’t take this seriously, Kwon also said they have “$3 billion ready to seed this reserve.”
P2P electronic money that is easier to spend and more attractive to hold #btc
— Do Kwon 🌕 (@stablekwon) March 14, 2022
Not a few days later, Bitcoin purchases started pouring in. Terra bought in $125 million batches, leading some analysts to believe there is an incoming supply shock.
This brings us to reason number two.
The offer is getting thinner
Commenting on the above was popular cryptocurrency proponent and industry commentator Pentoshi, who outlined the following regarding Terra’s Bitcoin purchases:
2.5-3k BTC per day of delivery removed over a long period of time = huge impact. Those in short supply will have to cover higher at some point if the supply itself goes away. What is scarce becomes scarcer. This clip can bring back the monkeys, in which Do Kwon is the lord of the monkeys.
Essentially, the analyst is talking about the concept of a supply shock where demand heavily outweighs supply, essentially pushing the price up.
In addition, market data showed that bears were insufficiently prepared for this move. As we reported earlier today, Bitcoin’s volatility has wiped out more than $410 million in liquidations in the past 24 hours, about 80% of which were short positions.
Overall market sentiment turned positive
Bitcoin, and by extension the entire cryptocurrency market, remains largely correlated with Wall Street, as much as native proponents would like to uncouple.
Over the past five days, some of the largest indices in the US — including the S&P 500, Nasdaq and the Dow Jones Industrial Average — have all traded in the green.
In addition, tech companies like Tesla are making significant profits. TSLA shares are up for the 9th consecutive day, rising a whopping 35% over the same period.
This could mean that investors become more susceptible to the risk-on-trade, and Bitcoin fits the definition.
All in all, it’s important to stay very cautious as the price is currently hovering around the annual close and failed to make it through last time, although it got pretty close.
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