E-Paper
Why is crypto suddenly rallying? Bitcoin jumps 20% as $2.7 billion short squeeze hits
Bitcoin rises 20% in a week as lower Treasury yields, a $2.7 billion short squeeze and Clarity Act hopes fuel a sudden crypto market rally.
Bitcoin was on track to gain around 20% this week as of early Friday. The world’s largest cryptocurrency has jumped sharply after several positive developments around the crypto market.
Bitcoin was last trading at $75,343.01, compared with $62,836.88 at the start of the week. This shows how quickly the cryptocurrency has bounced back in just a few days, according to CNBC. The rise was not limited to Bitcoin. On Thursday, Coinbase shares rose 7.5%, while Circle gained 6.45%. Strategy, one of the biggest corporate holders of Bitcoin, climbed 7.8%.
Bitcoin rally gets stronger
The ProShares Bitcoin Strategy ETF was up 5.5% in premarket trading, showing that investors were also buying into Bitcoin-related financial products. The Bitcoin rally began on Wednesday after US Treasury yields dropped sharply. The move came after the US Treasury made a major intervention in the bond market. Lower bond yields reduced some of the pressure on riskier investments such as cryptocurrencies.
Why Treasury yields matter
When Treasury yields rise, investors can get better returns from relatively safer government debt. This can make risky assets such as Bitcoin less attractive. When yields fall, some investors may become more willing to move money into riskier assets. The drop in yields helped push investors back into cryptocurrencies. The rally then became much stronger because of a massive short squeeze.
