Bitcoin, the world’s largest cryptocurrency, experienced a significant surge, reaching above $28,000 in what has been the largest short squeeze this month. This sudden increase in price resulted in the liquidation of approximately $36.6 million of short positions in the past 24 hours, marking the highest amount of short liquidations since May 28, according to data from CoinGlass.
The price of Bitcoin had been relatively stable around $26,800 for most of the day before it skyrocketed to as high as $28,150 within a few hours. Although it has since dropped to around $27,900, it still represents a 5.2% increase over the past 24 hours, outperforming most other digital assets.
This surge in Bitcoin’s price comes amidst a series of major crypto initiatives announced by large financial institutions. These announcements have helped to improve the mood in the crypto market, which had been dampened in recent weeks due to increasing regulatory pressure in the U.S., including lawsuits against crypto exchanges Binance and Coinbase.
Deutsche Bank, a banking giant, announced on Tuesday that it had applied for a digital asset custody license in Germany. On the same day, EDX Markets, a crypto exchange that has received funding from financial heavyweights including Charles Schwab, Citadel Securities, and Fidelity Digital Assets, began offering trading with Bitcoin and Ether. Furthermore, last week, investment management giant BlackRock surprised markets by filing for a spot Bitcoin exchange-traded fund (ETF).
Brent Xu, CEO and co-founder of decentralized finance (DeFi) bond market platform Umee, believes that the Bitcoin rally is correlated with the news of these larger traditional financial institutions seeking serious exposure to the digital asset ecosystem. He stated, “It’s clear that BlackRock, Fidelity and the others have client bases that want to invest in BTC and other crypto assets by way of ETFs and other more traditional investment vehicles.”
Xu added that this news has somewhat blunted the relatively bleak regulatory environment in the U.S., and it also suggests that these big players are seeking a regulatory environment that is clearer and more fair than the current one.