Bearish Bets Wiped Out as Bitcoin Surges, Liquidating $50M in Short Positions. What's Driving the Cryptocurrency's Meteoric Rise?

Bitcoin surged past $40,000 for the first time since April 2022 amid increasing macroeconomic liquidity and anticipation of a US Bitcoin ETF. However, some traders predict Bitcoin may be getting ahead of itself and a major price retracement of over 25% could occur. Short positions worth over $50 million were liquidated on December 4th alone as Bitcoin rose, wiping out bearish bets. However, some traders see the $40k level as an opportunity to "trap" late bulls and drive the price down to the low $30k range. The Federal Reserve's signals of a potential policy pivot away from rate hikes and towards cuts in 2023 boosted risk appetite across markets. Crypto market sentiment, as measured by the Fear & Greed Index, has reached levels of "extreme greed" not seen since Bitcoin's last all-time high in November 2021.