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Bitcoin’s Sudden Surge
In a surprising turn of events, Bitcoin (BTC) experienced a sharp surge on Tuesday, reaching $35,500, driven by a “mini altcoin season” and an overall positive sentiment in traditional financial markets. This rally led the total cryptocurrency market capitalization to a 16-month high, standing at a staggering $1.3 trillion, a level not seen since May 2022.
The Short Squeeze
The sudden price increase occurred during a relatively quiet trading session when Bitcoin jumped nearly 3% from its previous level of $34,600. Some experts suggest that this rapid price movement could be attributed to a short squeeze in the cryptocurrency derivatives market. As of the latest data available, Bitcoin was trading at $35,600, marking a notable 2% gain in the past 24 hours.
While Bitcoin enjoyed a resurgence, altcoins like Solana (SOL), toncoin (TON), and Crypto.com’s ecosystem token (CRO) experienced significant gains ranging from 5% to 10%. This was largely due to ongoing capital rotation from Bitcoin into alternative cryptocurrencies. However, not all altcoins saw gains, as tokens like Binance’s BNB, Ripple’s XRP, Cardano’s ADA, and dogecoin (DOGE) retreated by 3% to 4% after earlier gains in the week.
Ethereum Remains Stable
Meanwhile, Ethereum (ETH) remained relatively stable, hovering around the $1,900 mark. Nevertheless, one analyst cautioned against underestimating Ethereum’s potential, citing increased blockchain activity that could drive its price up to $3,000.
Market Index and Total Capitalization
The CoinDesk Market Index (CMI), which tracks 189 cryptocurrencies, showed a 1% increase in the overall market. The notable surge in the total cryptocurrency market capitalization, now at $1.3 trillion, can be attributed to the expanding crypto rally, which is no longer solely dependent on Bitcoin. This represents the highest market cap reading since late May 2022, a period marked by the tumultuous events in the Terra ecosystem.
Positive Sentiment in Traditional Markets
The positive sentiment in traditional financial markets, characterized by increasing risk appetite, also played a role in supporting the digital asset space. Safe-haven asset gold witnessed a drop to its lowest price in three weeks, while West Texas Intermediate crude oil (WTI) experienced a 4% decline, reaching its weakest level since July. In contrast, the Nasdaq 100 index continued its seven-day winning streak, advancing by 1.1%.
The “Mini Altcoin Season”
Looking ahead, as Bitcoin’s price remains within the range of $34,000 to $36,000, there is growing evidence of a “mini altcoin season” in the crypto market, as outlined in a report by K33 Research. Traders are capitalizing on profits following a substantial Bitcoin rally by redirecting their investments into smaller, higher-risk tokens. Concurrently, the report highlights the increasing inflows into Bitcoin-related funds, which provide essential support for BTC’s price.
Vetle Lunde, a senior analyst at K33, expressed strong bullish sentiment, stating, “It’s hard, nearly impossible, not to remain bullish. An ETF verdict is nine weeks away, and institutional traders provide the only significant heater witnessed in the derivatives market.
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