Why Is Bitcoin Rising?

Bitcoin crossed the $118,000 mark this Friday morning, just one day after setting an all-time high above $112,000.

Massive Liquidations on Bitcoin

Bitcoin is experiencing a spectacular surge, rising from $110,000 to $118,000 in less than 24 hours. We haven’t seen such a liquidation of short positions in several years.

Stop-loss orders of about 237,000 traders were triggered. The biggest loss was a short position of $88.5 million on HTX. In total, over half a billion dollars worth of short positions have just evaporated.

This breakout is potentially linked to the intensification of the smear campaign against Federal Reserve Chairman Jerome Powell. Donald Trump nicknamed him “Mr. Too Late” due to his refusal to lower interest rates despite falling inflation.

The pressure has increased since the U.S. president sent him a handwritten letter urging him to act on rates. This week, Mr. Powell was accused of lying to Congress about details of a planned renovation of the Fed headquarters estimated at about $2.5 billion.

“They are trying by all means to push him to resign,” said Alan Blinder, former Fed vice-chairman. “I don’t believe he will, and I don’t believe he should,” he added.

It should also be noted that the Supreme Court clearly indicated in a May ruling that it would not support Mr. Powell’s removal by the president:

The Federal Reserve is a unique quasi-private entity that fits into the historical and distinct tradition of the first and second central banks of the United States.

U.S. Supreme Court

What if Jerome Powell resigns?

There is a strong chance that the Fed would open the credit floodgates by lowering rates. Bitcoin is a hedge against monetary devaluation caused by budget deficits. The U.S. deficit obviously weighs heavily in the balance, probably 30% of total global budget deficits.

The “One Big Beautiful Bill” recently passed by the U.S. Congress is expected to add $5,500 billion to the American debt. Debt that already stands at $36,600 billion, or 124% of GDP. Enough to worsen government borrowing rates…

So much so that with interest on the debt reaching $1,000 billion per year (1/5 of tax revenues), there is a strong chance the Fed will end up bringing out its printing press (QE).

Indeed, the American central bank returns to the government the interest it collects on Treasury bonds it acquires via QE. In other words, the exponential effect of interest is neutralized. This is probably what Donald Trump seeks by ousting Jerome Powell.

Some think the rally is rather linked to Amazon. Rumors have indeed been circulating for some time that the multinational does not rule out making bitcoin a treasury asset. The rumor gained momentum after Jeff Bezos sold $665 million. For what purpose? To buy bitcoins?

Elon Musk has also made several statements suggesting he will soon buy bitcoins. Could he be the one pulling the strings since yesterday?

Don’t miss our article: Bitcoin: Bitwise CEO Targets $1,000,000.