Bitcoin and ether climb higher amid broader market rebound

TheCryptocurrencies rose on Friday after a steep sell-off a day earlier that wiped out $150 billion from the market.

According to Coin Metrics, there was a 1.6% rise in the price of Bitcoin. After falling as low as $34,338.57 on Thursday, the coin had jumped as much as 11% over the previous 24 hours. The price of ether rose to $2,709.22.

The sell-off was sparked by the invasion of Ukraine by Russia. More institutional investors are getting involved in the market and short-term investors are entering it, which has led to a correlation between the two.

In a crisis, all correlations go to 1 and the sharp drop was a reminder, according to the head of market insights at Genesis. The bounce shows long-term investors have been waiting in the wings to buy the dip and that risk traders are now betting things won't be as bad as they looked at first light.

We knew that a big move was coming, but we didn't know which direction it was going. Now we know.

On Wednesday, the correlation between the S&P 500 and bitcoin reached its all-time high.

On two other occasions, the correlation was over one and it reverted back to its previous levels. Risk investors are likely to cede price-setting ground to longer-term investors who see bitcoin as an insurance asset in times of currency turmoil and inflation. We don't know when this will happen.

Major indices closed higher on Friday after a stunning reversal in U.S. stocks on Thursday. The price movement was positive.

A so-called short squeeze is one of the reasons for the rebound of thecryptocurrencies.

According to data from Glassnode, about 73% of traders held short positions on Thursday. More than 180 million dollars of liquidations has occurred, and sentiment has shifted bullish, according to the CEO of the fund. Friday was the day options were set to expire.

Market participants went short in order to protect themselves from downside risks. The vice president of corporate development and international at Luno said this was defensive positioning. The market is closing its positions.

When investors go short, they are betting on the price of the coin going down. If you buy a futures contract that bets on a lower price of thecryptocurrencies than where it is trading, you can short it. These are usually sold at an expired date.

A trader who bets that the price of bitcoin will go down would sell a contract with the hope that it will go down so they can buy it back at a lower price. If a trader closes out their position and the price of the contract goes up, then they have to buy the contract back at a higher price.

That can cause a short squeeze.

Wald said that the momentum appears to have legs and should continue at least through the weekend.

Source: www.cnbc.com