Bitcoin Rises As Other Cryptocurrencies Try To Recover Following A Big Sell-Off.

Cryptocurrencies rose on Friday, following a major sell-off the day before that saw $150 billion vanish from the market as Russia attacked Ukraine.

Following the news of Russia’s invaded Ukraine, cryptocurrencies have taken a steep sell-off a day earlier that saw around $150 billion wiped off the market cryptocurrencies rose on Friday

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according to Coindesk data, Bitcoin was trading about 9.4% higher at $38,709 at 6:54 a.m. ET. And in the last 24 hours, it has risen above $39,000 which on Thursday was as low as $34,338.57. Other coins have gained as well including ether and XRP

As a result of Russia’s invasion of Ukraine, on Thursday not only did cryptocurrencies witness a huge sell-off but also global stocks fell sharply.

Bitcoin Rises As Other Cryptocurrencies Try To Recover Following A Big Sell-Off.

According to Vijay Ayyar, vice president of corporate development and worldwide at bitcoin exchange Luno, “the major cryptocurrency rebound may also be the consequence of a so-called short squeeze,” ” Given the events in Ukraine, market participants were likely forced to go short on Bitcoin [bitcoin] to limit downside risk.

This was defensive positioning essentially,” Ayyar said. ““We’re now seeing the market unwind as shorts sell off their bets.”

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When investors go short, they bet on the price of the cryptocurrency to go down.

A trader bets the price of bitcoin to go lower so as to sell a contract hoping that it drops so they can buy it back with a lower price and gain the difference.If the contract price rises and a trade closes out its position, the trader must buy it back at a higher price.

That can push the bitcoin price higher, which results in a short squeeze.

Bitcoin Rises As Other Cryptocurrencies Try To Recover Following A Big Sell-Off.

That trader may also borrow so they don’t have to put in 100% of the money that the contract is worth. But they then need to constantly fund the position in order to keep it open with a minimum amount of money.

If a trader’s minimum trading requirement cannot be met, they may close the position. Alternatively, traders who have taken short positions might choose to close them themselves.

Ayyar said that this is the main driver at the moment for the move higher in bitcoin and other cryptocurrencies.

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