Why Did the Bitcoin Price Suddenly Rise, Does the Rise Have the Power to Continue? Analysis Company Predicted What Will Happen Next

Cryptocurrency analysis company Blofin Academy has released its evaluation of Bitcoin's recent rise, attributing the upward momentum to increased investor sentiment and partially supportive actions by market makers.

However, the company warns about potential market volatility due to macroeconomic uncertainties and derivative traders' positions.

On the first trading day following the New Year holiday, there was a significant recovery in both the US stock and cryptocurrency markets. Despite the high levels of the DXY index and US Treasury yields, Bitcoin (BTC) and the S&P 500 ETF (SPY) showed a strong upward momentum reflecting renewed investor confidence.

The relaxation of the tendency to avoid risk after the holiday played an important role in the recovery. For SPY, the hedging behavior guided by a positive gamma peak of market makers provided significant support allowing for a stable recovery.

According to the analysis company, Bitcoin exhibits different market dynamics compared to SPY. Following the 'cryptocurrency witching hour' representing the last live trading hour, the significant decrease in positive gamma inventory held by market makers, while the negative gamma inventory remained significantly. This situation led market makers to adopt the 'buy the peaks, sell the dips' strategy for BTC, unlike SPY, where they engage in high sales and low purchases. As a result, implicit volatility (IV) continues to remain high for BTC, while SPY's IV has moderated.

Investor optimism continues to be the primary driving force behind the price increase of Bitcoin. Increasing call option purchases by investors have shifted the market skew towards the upside. However, Blofin Academy notes that this upward trend is concentrated in near-month options, limiting the sustainability of price momentum in the long term.

Blockchain traders seem to be expecting a period of price fluctuations around the $100,000 level for Bitcoin. Many of them have expressed their short-term withdrawal expectations by engaging in credit trading near this level. Despite these fluctuations, the overall sentiment of investors towards the upward trend of Bitcoin in the medium and long term remains positive.

BTC1.96%
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