Why is Bitcoin price up today?

Key takeaways:

• Bitcoin gained 2% to $96,530 on May 7, fueled by US-China trade deal hopes.

• BTC price rises with $83.6 million in short liquidations, with open interest up 26% to $64.4 billion, signaling strong bullish momentum.

• A classic bullish reversal pattern is still in play, targeting BTC price at $100,000 and beyond.

Bitcoin (BTC) is up today, rising over 3% in the last 24 hours to over $97,000 on May 7. Its daily trading volume has jumped 37% to $31.7 billion.

Let’s take a look at the factors driving Bitcoin price up today.

Bitcoin rises on hopes of a US-China trade deal

Bitcoin briefly hit $97,700 during the early Asian trading hours on May 7, driven by optimism over potential US-China trade talks. 

Disclosing plans to travel to Switzerland to meet a team from China’s Ministry of Commerce, US Treasury Secretary Scott Bessent said:

“The current tariffs and trade barriers are unsustainable, but we don’t want to decouple.”

China’s commerce ministry signaled openness to negotiations following US outreach. This has boosted risk appetite across markets, including cryptocurrencies.

Despite the surge, skepticism remains, with Polymarket bettors giving only a 25% chance of a deal by June.

The focus remains on the May 7 FOMC meeting, where the US Federal Reserve is expected to deliver its decision on interest rate cuts. Traders are growing less confident that the Fed will ease monetary policy, with the chances of interest rates remaining unchanged after today’s meeting standing at 95.6%, as per the CME FedWatch Tool. 

While numerous analysts believe that Bitcoin’s price will rally regardless of the Fed’s decision, traders remain on edge. Any shift in Fed Chair Jerome Powell’s tone could impact risk appetite and trigger market volatility.

Over $83 million in BTC shorts liquidated

BTC’s recovery on May 7 is accompanied by significant liquidations in the derivatives market, signaling strong upward momentum.

Over $83.6 million of short Bitcoin positions have been liquidated over the last 24 hours, compared to $15 million in long liquidations. Bearish traders are forced to sell their positions when short positions are liquidated.

The scale of these liquidations mirrors the period between March 23 and March 25, when a total of $122 million in short BTC positions were wiped out, accompanying a 6% rise in price over the same period.

Bitcoin’s open interest (OI) has also climbed steadily over the last 30 days, up 26% from $50.8 billion on April 8 to $64.4 billion at the time of writing. BTC OI has jumped by 4% over the last 24 hours, reflecting increased trader participation.

Although the funding rate briefly flipped negative on May 5, it increased to 0.0046% on May 7, suggesting a stronger bullish conviction.

Bitcoin price still validating falling wedge pattern

Bitcoin’s ongoing price rise is part of a breakout from its prevailing falling wedge, a classic bullish reversal pattern.

Additionally, Bitcoin has reclaimed key support levels, including all the major moving averages and the yearly open at $93,000. 

A key barrier now sits at $98,000. A breach of this level will see Bitcoin’s price rise to hit the technical target of the falling wedge at $100,200.

On the other hand, the emergence of the bearish divergence from the RSI points to a possible weakening of momentum. A daily candlestick close below $93,000 could drive prices back toward the $90,000-$87,000 level, where the 200-day, 10-day and 50-day SMAs are.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.