Bitcoin Rally Spurs Optimism for Early Thaw to Crypto Winter

Bitcoin gained for a second day, spurring optimism among the almost always bullish advocates of the bellwether cryptocurrency for an end to the months-long decline known as crypto winter.

The virtual currency rose as much as 4.1% to $21,018, bringing its increase since Monday to as much as 7.8%. That’s helped to reduce this year’s decline to about 55%. Other digital tokens gained more on Wednesday, with Ether jumping 6.4% and Dogecoin increasing 13%.

Massive #Bitcoin pump happening now! 🚀

— Miles Deutscher (@milesdeutscher) October 26, 2022

Crypto traders celebrated the advances, a welcome change after months of limited price action. Bitcoin broke above $20,000 for the first time in more than two weeks on Tuesday, ending its longest run below that price level since the token first breached the threshold in late 2020.

The upward movement could point to “a building crypto sentiment shift,” according to Noelle Acheson, author of the “Crypto is Macro Now” newsletter.

“It remains to be seen whether this is enough to awaken the momentum traders, but it does feel like something has changed,” she said. Acheson pointed to high open interest, “hinting at more activity ahead as traders come back into the market.”

Bitcoin saw its largest amount of short liquidations since July 2021, she said. That suggests “at least some of the rise has been fueled by short-covering,” Acheson said.

Aggregate short liquidations on exchanges hit $700 million during Tuesday’s crypto specific surge, with the highest levels for Ether and Bitcoin since May and July 2021 respectively, according to data from Genesis.