Crypto Market Experiences Technical Rally Amid Regulatory Optimism

Short Squeeze Drives Daily Gains

Major cryptocurrencies witnessed a notable surge on Monday, with Bitcoin (BTC) rising 1.43% to US$ 89,567 and Ethereum (ETH) gaining 1.75% to US$ 3,042 within 24 hours. The upward movement was primarily attributed to a significant short squeeze in crypto derivative markets, resulting in the liquidation of approximately US$ 49 million in BTC short positions and US$ 47 million in ETH short positions. This forced buying pressure contributed to the rapid price increase.

Mixed Performance Year-to-Date

Despite the positive daily performance, both major cryptocurrencies remain under pressure year-to-date. BTC has declined 4.10% while ETH has dropped 8.67% compared to their starting levels this year. This mixed performance reflects the ongoing challenges in the crypto market, including macroeconomic factors and regulatory uncertainties.

Factors Supporting the Rally

Analysts from Tokocrypto suggest that while the current rally is largely technical, several factors are providing support. These include positive regulatory developments in the United States, particularly the easing of restrictions on banks providing cryptocurrency custody services. Additionally, the reduction in BTC reserves on exchanges has helped limit selling pressure, contributing to the price stability.

Challenges Ahead

Despite these positive factors, significant challenges remain. The persistence of high interest rates is expected to continue weighing on the crypto market throughout 2025. Analysts warn that unless there is a substantial change in macroeconomic conditions, the current rally may struggle to gain sustained momentum. The market's ability to maintain these gains will likely depend on further regulatory clarity and broader economic developments.