Bitcoin and other major cryptocurrencies rallied on Wednesday after Federal Reserve Chair Kevin Warsh warned that prices remain too high. Traders wiped out hundreds of millions in short positions as one analyst called a market bottom, while another urged caution.
Bitcoin climbed 2.91% to $59,898.38 on Wednesday after Federal Reserve Chair Kevin Warsh told an international conference that prices remain too high. According to Foreign Policy Journal, Warsh said "prices are too high", a remark that sent leading cryptocurrencies broadly higher.
The token briefly broke past $61,000 before sellers pushed the price back down toward $59,000. Trading volume for Bitcoin spiked 11% over the prior 24 hours, a sign of a sharp tug-of-war between buyers and sellers.
Altcoins follow Bitcoin higher
The gains extended across the market. Ethereum advanced 2.86% to $1,609.75, reaching the mid-$1,600s before hitting resistance. XRP gained 2.12% to $1.05, Dogecoin rose 1.75% to $0.07221, and Solana surged 6.46% to $71.61.
Crypto-linked equities rallied too. Strategy Inc. and Bitmine Immersion Technologies Inc. closed up 7.43% and 6.31%, respectively. The global cryptocurrency market capitalization rose 2.78% to $2.07 trillion over 24 hours.
Shorts get squeezed
The advance forced bearish traders to cover. More than $450 million was liquidated from the crypto market over 24 hours, with $279 million in short positions wiped out, according to Coinglass data. Bitcoin's open interest spiked 1.80% over the same period, and taker buy volume exceeded sell volume.
Analysts weigh the outlook
Analyst Ali Martinez said the market has reached its bottom, citing simultaneous "buy" signals on the TD Sequential indicator for Bitcoin, Ethereum, XRP, and Solana. Chartist Rekt Capital was more cautious, noting that Bitcoin's monthly close below the 50-month exponential moving average, currently around $63,000, mirrors patterns seen in previous cycles.
The macro backdrop stayed cautious. The CME Group's FedWatch tool showed markets pricing a 71% likelihood of the Fed holding rates steady in July, but nearly a 50% chance of a rate hike in September, after Warsh declined to signal the Fed's July move.
Source: Foreign Policy Journal
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