Bitcoin Tops $37K for First Time Since May 2022 as Short Squeeze Bumps Prices Amid BTC ETF Optimism

Bitcoin [BTC] prices crossed the $37,000 level for the first time since May 2022 on Thursday, extending the largest digital asset's massive recent rally.

Short sellers – traders who made bets prices will fall – might be exiting positions in a rush known as a short squeeze, fueling the move higher. Data shows just under $50 million in liquidations occurred in a four-hour period during early Asian trading hours, creating a short squeeze that drove prices up. BTC surpassed $36,000 a few hours earlier for the first time in 18 months.

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Bitcoin has surged recently amid optimism U.S. regulators will approve ETFs that hold BTC, something some experts believe will lure a flood of investment money into the original cryptocurrency. Those hopes increased Wednesday following a CoinDesk report that the Securities and Exchange Commission has opened talks with Grayscale Investments on the details of the company's application to convert its bitcoin trust, known as GBTC, into a bitcoin ETF.

Bitcoin short squeeze

A short squeeze is an unusual condition that triggers a rapid price rise in any asset – typically beginning when the price jumps higher unexpectedly and short sellers exit their positions, leading to a buying flywheel.

Over $21 million of those shorts were wiped on futures exchange BitMEX, followed by OKX and Binance. This suggests the move could have been driven by market trades based in Asia, where these exchanges enjoy a relatively large user base.

Liquidation refers to when an exchange forcefully closes a trader's leveraged position due to a partial or total loss of the trader's initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).

Bitcoin ETFs

Elsewhere, analysts at Bloomberg Intelligence doubled down on expectations of a spot bitcoin ETF approval in the U.S., reiterating a "90% chance" of a launch by January.

"Delay orders were issued by the SEC for BlackRock, Bitwise, VanEck, WisdomTree, Invesco, Fidelity & Valkyrie at the same time," analyst James Seyffart said in an X post. "If the agency wants to allow all 12 filers to launch – as we believe – this is the first available window since Grayscale's court victory was affirmed."