Flagship cryptocurrency Bitcoin has recovered to levels above $41,000, and the second largest cryptocurrency is back at the $3,000 price mark. Analysts offer three reasons for the bullish reversal in these top cryptocurrencies.
Image from CoinMarketCap
Nasdaq up more than 2%
Bitcoin has been closely tied to the stock market's Nasdaq Composite Index and Dow Jones recently. According to Colin Wu, a Chinese cryptocurrency journalist and blogger, the Nasdaq recently gained 2%, which may have helped Bitcoin rise above $41,400.
Bitcoin broke $41,600, up 12% in 24 hours, and Ether broke $3,000. Only a few of the top 100 cryptocurrencies gained more than BTC and ETH. The Nasdaq, which is closely related to cryptocurrencies, recently gained more than 2%.-Wu Blockchain (@WuBlockchain) February 5, 2022
The Santiment on-chain data provider also cited the rise in the stock market as a reason for the spike in bitcoin prices.
As prices began to rise on Friday, positive sentiment among cryptocurrency traders spiked to the highest level since late October 2021 compared to negative sentiment.
🥳 As stocks soar, #Bitcoin has rallied to $40,000 on Friday. With this rise, traders’ positive vs. negative reviews have spiked to the highest ratio since late October as BTC maximalists are joining in. 🚀 https://t.co/AP88CigUTN pic.twitter.com/1jrsTd1dfl– Santiment (@santimentfeed) February 4, 2022
Spot market drives bitcoin higher
Wu also tweeted that while Bitcoin and Ether have increased 12% and 6% respectively in the last 24 hours, other cryptocurrencies have not increased in value. However, CoinMarketCap shows some cryptocurrencies spiking in price – such as Near Protocol (15.50%), Decentraland (MANA) (13.20%), LEO (22.66%), SAND (17.67%) and others.
Nonetheless, Wu said the likely driver of bitcoin and ethereum price gains is the spot market, not the cryptocurrency derivatives market. He shared data showing that in the past 24 hours, bitcoin futures liquidation totaled just $100 million and short liquidation was $90 million, implying a relatively cold derivatives market.
Data show that despite the sharp rise in prices, but the 24-hour btc contracts closed only 100 million U.S. dollars, short positions closed 90 million U.S. dollars, indicating that the derivatives market is relatively cold, driven up the market by the spot.-Wu Blockchain (@WuBlockchain) February 5, 2022
Peter Schiff Weighs in on Bitcoin Price Spike
Noted bitcoin skeptic, SchiffGold co-founder and gold enthusiast Peter Schiff has weighed in on bitcoin supporters with his comments on the price spike above $41,000. He tweeted that this may be the last chance to buy the leading cryptocurrency above $40,000.
Earlier, he said on Twitter that he expects bitcoin to fall below $30,000 and then face a flash crash, with bitcoin falling to a low of $10,000.
His son Spencer, however, is a bitcoin enthusiast, despite Schiff Senior's many attempts to convert him to gold. Schiff Junior tweeted that he bought more bitcoin when the price went up.
Just bought some, thanks for the reminder– Spencer Schiff (@SpencerKSchiff) February 4, 2022