Prices Rose, But Bitcoin Surpassed $73,000… Was It a Short Squeeze?

▲ Bitcoin (BTC), Crude Oil/ChatGPT Generated Image ©

Despite the rise in the US March Consumer Price Index, core inflation showed a stable trend, leading Bitcoin (BTC) and Ethereum (ETH) to surge past macroeconomic pressures, igniting cautious optimism among investors.

According to DL News on April 11 (local time), the cryptocurrency market showed a clear upward trend immediately after the release of better-than-expected detailed inflation indicators. According to CoinGecko data, Bitcoin rose more than 2% in 24 hours, touching $73,111 at one point before consolidating around $72,549, with a weekly increase of 9%. Ethereum, the second-largest cryptocurrency by market capitalization, also surged to $2,250 during trading before settling at the $2,226 mark.

The market was driven by positive signals hidden behind the inflation figures. Although energy costs surged due to the aftermath of the war, pushing up overall consumer prices, core inflation, a key indicator excluding volatile food and energy, rose by only 0.2% month-over-month. Thomas Perfumo, Kraken's Head of Strategy, described this as a basis for cautious optimism, indicating a reduction in broad inflationary shocks.

With core inflation stabilizing, expectations for a Federal Reserve interest rate cut are cautiously emerging. Cryptocurrencies like Bitcoin and Ethereum have traditionally shown strength in low-interest-rate environments. Perfumo predicted that if the trend of decelerating inflation continues in the second half of this year, central banks would have more flexibility in monetary policy, which would be a strong tailwind for risk assets like Bitcoin. Angie Maltese, COO of Altius Labs, also added that despite macroeconomic pressures, bullish investors are preparing for an upward breakout, with perpetual contract funding rates on the rise.

Easing geopolitical risks also served as a major driver for the market's rise. The cryptocurrency market, which initially plunged due to early attacks by the US and Israel against Iran, regained stability last Tuesday when former US President Donald Trump announced a ceasefire with Iran. With peace talks scheduled for this weekend, investor expectations are further heightened.

Some also pointed to a short squeeze as the background for the recent price surge. James Butterfill, Head of Research at CoinShares, analyzed that a short squeeze occurred where investors who had shorted assets expecting a decline were forced to urgently repurchase them due to rising prices. This, combined with strong buying pressure from large-scale 'whales' (investors with significant capital), led to the dramatic rise in Bitcoin and Ethereum.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*