Bitcoin Spikes to $12,850, Burning Over $75 Million in Futures Contracts

Bitcoin is exploding higher on the back of two extremely positive fundamental events: PayPal adding support for cryptocurrency and the U.S. confirming an imminent fiscal stimulus package.

BTC currently trades for $12,800, far above the lows seen just a week ago at $11,200.

Source: BTCUSD from TradingView.com

The price of Bitcoin plunged last week as a result of news that OKEx had frozen withdrawals. The cryptocurrency is now returning higher as the market has shaken off that news event and has instead focused on the bullish ones.

Over $75 Million Liquidated in Bitcoin Futures

Few were expecting such an explosive move for Bitcoin.

It has been reported that over $75 million worth of Bitcoin short positions have been liquidated in the past hour alone. Skew.com, which tracks crypto derivatives markets, reported that $35 million was liquidated on OKEx while at least $40 million was liquidated on BitMEX. But as these two markets only make up a portion of the total derivatives volume, milions more were likely liquidated.

Despite the squeeze, the futures market has remained relatively tempered.

The funding rates on leading futures exchanges are barely peeking into the positive territory. The funding rates of Binance, BitMEX, and ByBit are all at the baseline of 0.01%/8 hours.

The funding rate is the fee that long positions pay short positions on a regular basis to ensure the price of the future trades around the price of the spot market. High futures rates form when the price of Bitcoin trades below the price of the future, presumably due to mass buying activity.

More to Come?

Bitcoin is ientering an interesting point in its price trajectory. As noted by one trader, the cryptocurrency is about to trade in a price region where there is little historical trading activity.

This may result in rapid price action both up and down as the market tries to determine where Bitcoin should trade at.

Bitcoin just entered my "I have no idea what is going to happen next because there is no volume data on any major exchange" zone. Cool pic.twitter.com/nj402n0AtA

— Adam (@abetrade) October 21, 2020

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