Why Bitcoin is suddenly rising and has gone through $47,000 – BTC Direct

The bitcoin price shoots up faster than the popularity of Will Smith falls. This is the first time that bitcoin has broken through the 47,000 dollar (42,900 euro) mark since early January.

Most cryptocurrency quotes track bitcoin’s upward movement. XRP, ethereum, VeChain and polkadot are showing nice, green numbers.

Betting on a decline

From price of bitcoin growing steadily, this is the seventh consecutive green day (the day is still long, so please knock) of the cryptocurrency. Many investors assumed that after 6 green days, there should be another negative day. This is reflected in the liquidated short positions.

Lost $410 million on gambling

You can open a short position on which you speculate on a fall in the price. Is bitcoin rising too fast? Then your position will be liquidated and you will lose your investment (and honor). The increase has liquidated more than $410 million in positions in the past 24.

Dates from Coinglass shows that the biggest liquidation on Bitmex has taken place. It was an open-ended position with a face value of a whopping $10 million. According to Coinglass, of all liquidated positions in the past 24 hours, 80 percent went short on bitcoin.

Why is bitcoin rising?

The simple answer to this question is that there is more demand than supply. But if we look at the reality, there are several reasons why there is now suddenly more demand. We want to highlight one.

Do Kwon is the founder of crypto project Terra. He said Terra plans to for $10 billion to buy bitcoin to act as collateral for its stablecoin (UST).

What makes UST different?

The major stablecoins are centralized, meaning there is a registered entity that holds the collateral for the stablecoin and ensures that it maintains its value. Consider, for example, how Tether works. While this is a simple solution, it poses a lot of problems as the centralized company behind a stablecoin can effectively control who owns it and what it can be spent on, making them not necessarily better than banks. In addition, Tether holds real dollars in their vault to safeguard the value of their USDT.

Terra does things differently, they use cryptocurrency to algorithmically keep the value of their UST at 1 dollar.

Of course they need a huge treasury for that. Last month, the Luna Foundation sold $1 billion worth of LUNA tokens (one of Terra’s coins).

Upward pressure

Kwon said Terra would continue to buy bitcoin “until it becomes mathematically impossible for idiots to claim the peg risk for UST.” He then shared a $3 billion investment plan in Bitcoin before raising the bar to $10 billion.

Suppose Terra manages to take that much bitcoin off the market, they would have twice as much bitcoin as MicroStrategy has in cash.

Bitcoin’s new payment layer?

With a bit of flexible reasoning, you could even argue that if UST becomes a success, Terra will become the payment layer of bitcoin’s blockchain. Then it will be interesting to see what this does to the popularity (if you can speak of it at all) of the Lightning Network.

The news about Terra has made many investors want to frontrun this $10 billion purchase. This means that they are already buying bitcoin in anticipation of the rising prices that Terra will cause anyway.

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