Brian Kelly, a trader with Fast Money, just spoke on the show to discuss Bitcoin’s recent price increase. The boom that occurred after the weekend saw the price of Bitcoin jump over 10% to over $39,000, gaining nearly $4,000 in a single day.
Brian Kelly agreed with Melissa Lee, the show’s host, that the short coverage led to the price increase. As the weekend drew to a conclusion, Kelly indicated that a large number of short coverings around the asset caused the price to rise. The price jump is said to have been caused by several factors.
The most popular explanation for the price increase was that Amazon was planning to integrate Bitcoin into its platform. The rumors, however, were only part of the cause for the digital asset’s considerable shift, according to Kelly. Other variables that contributed to the rally’s success are discussed.
Price Increase Catalyst
Brian Kelly addressed the notion that the Amazon news was the primary driver of Bitcoin’s price increase. According to Kelly, the Amazon news had been out in the market for roughly a week before the momentum stepped up.
According to Kelly, the high number of shorts, along with the news of Amazon and Tether, resulted in a “massive short squeeze” as the weekend came to a conclusion when the market is often less liquid than usual.
As the price rose, almost $1 trillion in shorts were liquidated in less than 24 hours, resulting in a short squeeze. Almost $800 million in shorts were liquidated in the same time frame, with Bitcoin accounting for over 70% of the total.
Following the short squeeze, Bitcoin’s trading volume and volatility levels, which had been tracking at yearly lows for over a month, have rebounded. Since then, the digital asset has gained traction, and the market appears to be determined to ride out this wave as long as possible.
Bitcoin is still a buy.
Kelly responded to a query about the asset’s price bouncing back before reaching $40,000 in response to a question. It’s fair to say that the rebound was unsurprising. Kelly, for one, is a bitcoin believer. “The big question is whether it will be adopted as an institutional asset,” Kelly explained. “And I don’t see anything that has persuaded me otherwise.”
Kelly went on to say that the federal bank and federal reserve’s decision to keep producing money could be a deciding factor. Kelly responded, “By my score, I don’t see how they can’t keep printing.”
The Fed’s printing of fiat money continues to be a source of concern for investors. If the amount of paper money generated is not controlled, this could lead to inflation. As a result, Bitcoin becomes a desirable asset for investors concerned about inflation. There is no possibility for an individual or a government to print or create more coins due to the asset’s restricted supply. As a result, controlling inflation is a must.