Key Factors Behind the Surge in Cryptocurrency Today

CoinJiew.com report:
The market sentiment is currently in the “greedy” zone, prompting more traders to buy and pushing up the prices of cryptocurrencies.
Short-term liquidation dominated the recent trading period, indicating a strong bullish momentum.
In the past 24 hours, the trading volume in the cryptocurrency market has dropped significantly, decreasing by more than 30%.
However, despite the decrease in trading volume, the overall market capitalization has slightly increased. So why are cryptocurrencies still rising despite the low trading volume?
Positive market sentiment is driving up cryptocurrency prices.
Positive market sentiment is one of the main reasons behind the upward trend in cryptocurrency prices. According to the following data from Coinglass, market sentiment remains optimistic.
The Fear and Greed Index, a popular investor sentiment indicator, currently shows “greed”;
This high level of greed often indicates an increase in buying activity as more and more traders are driven by FOMO (fear of missing out).
This sentiment can answer the question of why cryptocurrencies are rising today, as FOMO leads to more purchases and pushes up prices.
When the Fear and Greed Index points to greed, it usually indicates that traders are eager to enter the market. This creates buying pressure and drives up the prices of major assets.
However, it is worth noting that market corrections often accompany this rebound, as FOMO can quickly turn into FUD (fear, uncertainty, and doubt), leading to market volatility.
Another key factor explaining the rise in cryptocurrency prices is Bitcoin, the largest cryptocurrency by market capitalization;
In the past few days, Bitcoin has broken through the $63,000 resistance level and continues to climb, with prices staying above $68,000.
As of the most recent trading day, Bitcoin even reached $69,000, contributing to the overall growth of the market capitalization.
Bitcoin’s price stability above key resistance levels provides a solid foundation for the entire cryptocurrency market, as its performance often sets the tone for other assets.
As Bitcoin continues its upward trend, other cryptocurrencies have followed suit, further driving the market up.
Short-term liquidation is pushing up prices.
The cryptocurrency liquidation chart shows another reason for the rise in cryptocurrency prices. In the past few days, liquidation of short positions has significantly increased.
On October 8th, the short-term liquidation amount was about $71 million, while the long-term liquidation amount was $41 million;
On the next trading day, short and long liquidations were almost equal, at around $28 million.
However, on the most recent trading day, short-term liquidation skyrocketed to nearly $80 million, while long-term liquidation was only $38 million.
The increasing trend of short liquidation indicates that traders betting on price declines are being forced to close their positions.
As short positions are closed, buying pressure increases, leading to further price increases and a more bullish market.
Why are cryptocurrencies rising?
The rise in the cryptocurrency market can be attributed to several factors, including positive market sentiment reflected in the Fear and Greed Index, Bitcoin’s strong price performance, and the liquidation of short positions.
These factors collectively drive the market higher, even with a decrease in trading volume.
While the current trend is positive, traders should be aware that rapid price increases can lead to a market correction soon.