In the last month, Bitcoin's price has seen a surge of over 25%, reaching $44,000. This week alone witnessed a 16% increase in its value.
Bitcoin (BTC), as explained by Investopedia, is a virtual currency introduced in 2009 by Satoshi Nakamoto. It was designed to function as money and payment without any third-party involvement. Blockchain miners receive it as a reward for verifying transactions, and it can be purchased on multiple exchanges. Bitcoin operates within a blockchain - a distributed ledger that stores data and is secured by encryption methods. Transactions involving bitcoin are copied to new blocks, encrypted, and verified by miners. Once verification is complete, a new block is opened, and a bitcoin is created as a reward. The SHA-256 hashing algorithm encrypts the data stored in blocks into a 256-bit hexadecimal number.
CoinDesk reported that short traders who were betting against an increase in bitcoin prices lost over $90 million on Tuesday.
Investopedia explains that short selling is an investment strategy used to speculate on the increase or decrease of a stock's price. It is often employed by portfolio managers as a hedge against potential downside risk of maintaining a long position in the same security. Short sellers borrow stock at the current market price at the time of transaction and sell it at the current market price on a specified date. There's high risk associated with short selling due to the potential for quick losses if there's an unexpected rise in stock prices.
Julius de Kempenaer, senior technical analyst at StockCharts.com, shared his insights with CoinDesk: "The staging for this rally already started in the week beginning 10/23 when BTC managed to overcome the iron-beam resistance in the $30k area," he said. "On the weekly chart, the next expected level of resistance is around $48k, the peak set at the end of March 2022. All in all, the trend for BTC is clearly up, with a first target around $48,000 and support near $38,000."
