- Market sentiment is currently in the “greed” zone, prompting more traders to buy and pushing crypto prices higher.
- Short-term liquidations have dominated recent trading, indicating strong bullish momentum.
Over the past 24 hours, the trading volume of the cryptocurrency market has decreased significantly, dropping by more than 30%.
However, despite this decline, the overall market capitalization has increased slightly. So why are cryptocurrencies rising despite declining trading volume?
Positive market sentiment pushes up crypto prices
Positive market sentiment is one of the main reasons for the upward trend in cryptocurrency prices. According to data from Coinglass, market sentiment remains optimistic.
The Fear and Greed Index, a popular indicator of investor sentiment, is currently showing “greed.”
Source: Coinglass
This high level of greed often indicates increased buying activity, as many traders are driven by FOMO (fear of missing out).
This sentiment can answer the question of why cryptocurrencies are rising today, as FOMO leads to more purchases and pushes up the price.
When the Fear and Greed Index shows greed, it usually indicates that traders are rushing to enter the market. This creates buying pressure and increases the prices of key assets.
However, be aware that this kind of rally is often followed by a market correction, as FOMO can quickly turn into FUD (Fear, Uncertainty, Doubt) and cause market volatility. is important.
Bitcoin price hike supports market growth
Another important factor explaining why cryptocurrencies are rising is the positive price movement of Bitcoin, the largest cryptocurrency by market capitalization.
Over the past few days, Bitcoin broke through the $63,000 resistance level and continued to rise, maintaining the price above $68,000.
As of the latest trading session, Bitcoin reached $69,000, contributing to the overall market capitalization increase.
Price stability above major resistance levels provides a strong foundation for the overall cryptocurrency market, as Bitcoin's performance often sets the tone for other assets.
As Bitcoin continues its upward trend, other cryptocurrencies are following suit, pushing the market even higher.
Short-term liquidation increases prices
Analyzing the liquidation chart of cryptocurrencies reveals another reason why cryptocurrencies are rising. Over the past few days, there has been a noticeable increase in the liquidation of short positions.
As of October 8, short-term liquidations were approximately $71 million and long-term liquidations were $41 million.
In the next trading session, short-term and long-term liquidations were almost the same amount, approximately $28 million.
However, in the most recent session, short-term liquidations jumped to almost $80 million, while long-term liquidations were only $38 million.
Source: Coinglass
This trend of increasing short sale settlements indicates that traders betting on a fall in prices are being forced to close out their positions as prices continue to rise.
As short positions are resolved, buying pressure increases, leading to further price increases and the market becoming more bullish.
Why are virtual currencies rising?
The rise in the crypto market can be attributed to several factors, including positive market sentiment reflected in the Fear and Greed Index, Bitcoin's solid price performance, and the liquidation of short positions.
Together, these factors are driving the market higher, even as volumes decline.
Although current trends are positive, traders should be aware that rapid price increases could lead to a market correction in the near term.
