Why did bitcoin price increase today?

Bitcoin (BTC) has seen a significant bounce in the past few hours after hitting its lowest price since June 21 at $28,641 yesterday. At press time, BTC is up 3.7% from its bottom. In fact, BTC has even surpassed the $30,000 mark, indicating a significant shift in market sentiment. So the question arises.

Why is Bitcoin up today?

“The entire brief buildup of the last few days was just deleted,” analyst Byzantine General tweeted. Data from Coinglass supports this claim, showing that $27.8 million in BTC short positions were liquidated yesterday, followed by another $13.45 million today. This represents the most significant short liquidation since July 14th and is undeniably playing a major role in the current price action.

BTC Total Liquidations | Source: Coinglass

Perhaps the most influential reason for the sudden shift in market sentiment, however, was MicroStrategy’s recent announcement. The company said it would conduct $750 million in stock sales. Following the announcement, speculation abounded in the Bitcoin community that Michael Saylor could make more massive BTC purchases.

“As with previous programs, we may use the proceeds for general corporate purposes, including purchasing bitcoin and repurchasing or repaying our outstanding debt,” MicroStrategy CFO Andrew Kang said during a recent earnings call. While it remains unclear whether all of the proceeds will flow into Bitcoin, the likelihood of a significant portion is certain. Immediately following this announcement, Bitcoin surged 1.6% in an hour.

On-chain analytics firm Santiment tweeted, “Bitcoin has broken above $30,000 yet again with support from the many traders who have capitulated with price declines over the past week.” Volume is rising as August begins and this psychological resistance could be the Change mood positively.”

The chart shared by the company shows that trading volume regained momentum yesterday, hitting its highest level in six weeks. Also the lowest profit/loss amount in 7 months indicates a capitulation event.

Bitcoin Sentiment Shift | Source: Twitter @santimentfeed

Analyst @52Skew added that Bitcoin is seeing “real spot demand” on the Binance spot market, which he wanted to see for a strong price reaction. “Note the limit bid limit that has pushed the price up; typical of PvP conditions to enforce the pursuit of borders. Significant liquidity in the order book,” said the analyst.

What’s next?

However, he also warned that the 4-hour chart so far looks like a classic swing failure pattern (SFP) with a higher support/resistance window. The Swing Failure Pattern or SFP is a type of reversal pattern where traders aim for stop losses above a key swing low or below a key swing high to manipulate price direction by generating enough liquidity.

Bitcoin SFP Pattern? | Source: Twitter @52Skew

Nevertheless, the market seems to be full of anticipation. According to @DaanCrypto, “If the price starts to falter here, I would be on the lookout for another break of the lows and consolidation there.” $28.5K and $29.5K are the areas of interest. Meanwhile, a break would be above the monthly and weekly open resistance zone between $29,236 and $29,300 confirms a bullish scenario with the target price at $30,000.

BTC Price Analysis | Source: Twitter @DaanCrypto

At press time, BTC has failed to reclaim the red resistance zone and is trading at $29,606.

BTC price below key resistance, 4 hour chart | Source BTCUSD on TradingView.com

Featured image from Kanchanara /Unsplash, chart from TradingView.com

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