3 Reasons Why Bitcoin Surged 6% to Break Back Through the $90,000 Level

Bitcoin (CRYPTO: BTC) is once again on the move today, with the world's largest cryptocurrency skyrocketing off its low of around $85,000 yesterday to above $91,000 at the time of writing. Over the past 24 hours, this impressive 6% move (as of 5 p.m. ET) has added nearly $140 billion in market capitalization to this token and improved the balance sheets of many Bitcoin treasury companies, crypto miners, and institutional funds that rely on Bitcoin's price heading higher.

Indeed, given Bitcoin's pivotal role in the broader digital assets sector, this is a significant move that warrants further exploration. Let's try to unravel some of the reasons behind this move. Here are the top three catalysts I'm currently monitoring.

3 key catalysts driving Bitcoin's move today

Source: Getty Images.

Perhaps the most notable catalyst I've seen espoused as the primary driver of today's move in Bitcoin is the broadly improving sentiment among market participants, whether in the crypto market or in other high-growth asset classes. Tech stocks rebounded nicely today, the 10-year Treasury rallied, and the overall market capitalization of all cryptocurrencies surged by more than 5% over the same 24-hour period noted above.

The reality is that sentiment and macroeconomic developments play a larger role in Bitcoin's daily price moves than is the case with other cryptocurrencies. That's due in large part to this top token's size and importance to a host of other Bitcoin treasury companies, miners, and institutional investors (or those in spot ETFs), which can push or pull capital toward Bitcoin in meaningful ways every day.

That said, the second key catalyst I think is even more pertinent for Bitcoin today is liquidation data around perpetual futures contracts. These derivatives allow investors to place leveraged bets on directional moves in the price of Bitcoin over short periods of time. With the market turning increasingly bearish, a reversal of sentiment has led to the liquidation of more than $165 million worth of short derivatives contracts over the past day. What that means in plain speak is that those looking to short Bitcoin (or benefit from a continued downside move) have been wiped out, allowing for an even more violent upswing in this cryptocurrency's price.

Finally, solid data on net inflows into spot Bitcoin ETFs (and a total of $125 billion in net assets across all such exchange-traded funds today) suggests to me that there's plenty of dry powder ready to flow into Bitcoin if this rally is sustained.

In this type of macro backdrop, with such volatile price swings from day to day, investors should be cautious. We'll have to see if this momentum can continue. However, for now, bulls appear to be stepping back into Bitcoin, setting up an interesting backdrop for the coming days and weeks.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.