Ethereum
Why Ethereum, Bitcoin and Dogecoin Rallied Today
Major cryptocurrencies have reached new highs on the back of multiple tailwinds.
Several major cryptocurrencies started the week on a high note today, amid a confluence of positive catalysts, including possible short squeezes, tailwinds in technical trading and – perhaps most surprisingly – geopolitical tailwinds from major Chinese fund management companies.
Ultimately, at the close of the regular session on Monday, the price of Ethereum (ETH 1.26%), up 9.1%, Bitcoin (BTC 1.10%) had increased by 3.8%, and Dogecoin (DOGE 1.59%) gains a little more than 2%.
On a possible crypto short squeeze, technical tailwinds
According to Coin Data this morning, the digital assets market recorded over $176 million in liquidations over the past 24 hours, the vast majority of which (around $124 million, or 72%) came from open company liquidations. short positions.
As the price of major cryptocurrencies has risen in recent weeks – driven by a combination of factors including strong inflows into Bitcoin ETFs, an upcoming Bitcoin Halving Eventand expectations regarding possible approval for the top spot Ethereum Exchange Traded Funds (ETFs) — it appears that short sellers are indeed being forced to close their bearish positions. The resulting increase in purchasing demand can cause the so-called short presswhich drives the prices of digital assets even higher.
At the same time, technical trading patterns can also play a role. According to widely followed Bitcoin analyst TechDev on social media platform consolidation above key technical levels and trading averages that have historically preceded significant rallies for the world’s most important cryptocurrency.
Is China Entering the Bitcoin ETF Market?
If that wasn’t enough, Chinese financial news site Securities Times reported on Monday that several China-based financial giants, including Harvest Fund and Southern Fund, had submitted applications through Hong Kong subsidiaries for their own ETFs Bitcoin spot. These applications are currently awaiting regulatory approval.
This news is particularly important, given China’s previous public hostility towards Bitcoin. In 2021, China’s main regulators crypto trading and mining prohibited, causing the price of Bitcoin to plunge at the time. However, it has become clear in recent years that China’s ban on cryptocurrencies was not absolute, and cryptocurrency trading and mining has reportedly continued to flourish in the country. If China does indeed soften its stance, it would constitute just the latest significant validation of the global adoption of Bitcoin and other cryptocurrencies.
The United States Securities and Exchange Commission (SEC) only approved the world’s first 13 Bitcoin ETFs in January 2024. The historic approvals were arguably the most significant validation to date of cryptocurrencies as a legitimate investment asset class. Since ETFs can be bought and sold throughout the normal trading day through almost any online broker – unlike requiring investors to set up separate crypto trading accounts with a company specific to crypto – they are a much more accessible means of investment for everyone. are considering making cryptocurrencies a significant part of their portfolio.
Since then, Bitcoin ETFs have seen huge inflows; at the end of last month, for example, the ARK 21 shares Bitcoin ETF (NYSEMKT:ARKB) saw net inflows of over $200 million, becoming the third Bitcoin ETF in the United States to cross the $200 million mark this year.
For comparison, China’s Harvest Fund and Southern Fund manage over $230 billion and $280 billion in total assets, respectively. So, if their Bitcoin ETF applications meet regulatory requirements through their Hong Kong subsidiaries and the mainland Chinese government continues to opt for a more cautious approach with indirect approval, this could signal a massive positive shift towards more adoption. widespread use of cryptography in the long term. the second largest economy in the world.
This certainly does not guarantee that Bitcoin, Ethereum and Dogecoin will continue this incredible rally indefinitely. But as cryptocurrencies, in general, continue to enjoy greater adoption globally, it’s no surprise to see the prices of the most important digital assets continue to reach new highs.
Steve Symington has no position in any of the stocks mentioned. The Motley Fool posts and recommends Bitcoin and Ethereum. The Mad Motley has a disclosure policy.