Uncovering the Underlying Dynamics: A Deep Dive into the Factors Fueling Bitcoin's Price Rise and Its Implications for Investors

As the crypto market continues to heat up, many investors and analysts are closely watching the movements of Bitcoin. Recently, #btc broke above $21,000 for a brief time, and a lot of people are wondering what's driving this surge in price.

One of the main reasons is the high level of short liquidations, which reached $725 million in 24 hours. Data from crypto tracker CoinGlass shows that over 133,665 traders were liquidated during this time. Ethereum was hit the hardest, with liquidations reaching nearly $260 million, while #bitcoin saw $239 million in shorts liquidated.

But why is this happening now? According to an article on cryptoslate.com, over 66% of the total Bitcoin supply hasn't moved in the last year, setting a record for illiquid supply. According to some industry experts, this could mean that the market is  susceptible to manipulation. Caitlin Long, a 22-year Wall Street veteran and early Bitcoin adopter, recently tweeted "Don’t forget – illiquid markets are easier for manipulators to manipulate than liquid markets. Lots of leverage still to be liquidated (based on publicly available info) & many people have incentives to pump price short-term.". While it's important to keep this in mind, it's also important to look at the bigger picture.

Many investors believe that the #crypto market is on the cusp of a bull run. Bitcoin is currently in a bearish cycle, but previous cycles have shown that the crypto market generally follows a cyclical pattern. With the number of coins being mined in circulation getting cut in half every four years, the bull run may look promising. However, it's worth noting that the Federal Reserve is trying to reduce inflation and promote deflation for the first time in Bitcoin's lifetime, which means it's uncertain how BTC will react to this new economic environment...

According to a chart posted by Glassnode Alerts on Twitter, the number of bitcoin addresses holding more than 10 BTC on their balances has touched a new two-year high. This investor cohort had earlier declined especially as the price of virtual assets suffered multiple dips and crashes. Furthermore, a smaller investor bracket, with addresses holding more than 1 BTC, also saw tremendous growth in the new year. According to bitcoinist.com, it reached a new all-time high of 979,707 addresses after swerving around 800,000 towards the end of 2022. This accumulation is seen as bullish for the market, as it suggests that these investors have gained confidence in the future of crypto despite the recent unfortunate events.

Moving on to #institutions, Black Rock CEO Larry Fink recently stated that #tokenization is the "next generation for markets," and investment banking giant Morgan Stanley announced that it now holds a large amount of crypto on behalf of its clients and billionaire investor Bill Miller announced that he has 50% of his personal wealth invested in crypto. The interest in the virtual asset industry is further observed at Texas A&M, one of the largest colleges[JS1]  in the United States who has begun to teach students about bitcoin and the passing of a law in El Salvador allowing bitcoin bond sales.

This is a significant step forward in terms of the mainstream acceptance and institutionalization of bitcoin, and it may attract additional investment and interest in the cryptocurrency.

In conclusion, while the recent price surge in BTC can be attributed to short liquidations and illiquid supply, there are also indications of growing institutional interest and potential for a bull market. It is important to take into consideration the potential for manipulation in illiquid markets and exercise caution when investing. It is also worth monitoring the unique #economic environment of reduced #inflation and promotion of deflation by the #FED, as it may impact the short-term reaction of BTC.