Federal Reserve officials' latest statements have fueled a rebound in risky assets, with Bitcoin once again crossing the $80,000 mark, and mainstream crypto assets also seeing gains. As prices rose rapidly, short positions were liquidated en masse, leading to a large-scale liquidation in the crypto market over the past 24 hours.
Bitcoin returns above $80,000
As of around the time of this publication, Bitcoin rose to around $80,270, with a 24-hour increase of nearly 3%. Ethereum approached $2,500, and XRP as well as BNB also saw gains, with XRP experiencing a single-day increase of about 6%.
This round of rebound did not occur only in the crypto market. U.S. stocks also strengthened, with the Dow Jones Industrial Average rising by 453 points, and both the S&P 500 Index and the Nasdaq Index gaining nearly 1%. The overall risk appetite in the market improved, driving a simultaneous rebound in crypto assets.
The Fed indicates a desire to lower expectations for interest rate hikes
The direct catalyst for the market recovery came from Federal Reserve Governor Jerome Powell. According to his pre-recorded speech at a Reuters event, if subsequent inflation data continues to improve, he is inclined to support keeping the current benchmark interest rate unchanged.
CME FedWatch Data shows that following this statement, the market's expectation of a rate hike at the meeting on September 15-16 dropped to 50.4%, from 63.2% the previous day. Meanwhile, the yield on U.S. 10-year Treasury bonds fell to around 4.73%.
A maintained interest rate usually indicates that the attractiveness of cash and bonds as sources of funds will not continue to rise, which also alleviates the pressure on risk assets from a stronger dollar. As a result, traders interpret this statement as a positive signal for stocks and crypto assets.
Short covering amplifies the upward trend
CoinGlass Data shows that in the past 24 hours, the total settlement amount in the crypto market exceeded 500 million US dollars, of which short positions were settled for about 416 million US dollars, and long positions were settled for about 92 million US dollars. More than 119,000 traders experienced margin calls.
Among them, the amount of short liquidations in the last hour exceeded 329 million US dollars, with short positions related to Bitcoin alone being liquidated for about 86 million US dollars. The rising prices forced short sellers to cover their positions, further driving up the market, which is also a typical short squeeze trend.
The market is focusing on non-farm data.
Next, market attention will turn to the employment report for August that the U.S. Bureau of Labor Statistics is about to release. This is the last important economic data before the Federal Reserve's interest rate meeting in September.
If employment data continues to weaken, it may further affect the market's judgment of interest rate paths. Previously, when monthly employment data fell short of expectations, it significantly reduced the likelihood of interest rate hikes, indicating that macroeconomic data remains an important trigger for short-term market fluctuations.
