Bitcoin prices neared $37,000 in Asian trading hours, creating a "short squeeze" that drove prices higher. Just under $50 million of bitcoin shorts (bets against the price rising) were liquidated in a four-hour period, extending the BTC rally. Short squeezes occur when the price of an asset jumps higher than expected and short sellers are forced to cover their positions, driving the price higher still. Exchanges with a large Asian presence such as BitMEX, OKX and Binance accounted for large chunks of the exited positions. Bitcoin's bullish momentum followed reports late Wednesday that the U.S. SEC is beginning talks with fund manager Grayscale, with whom it has been engaged in a legal fight over the conversion of the Grayscale Bitcoin Trust into a spot ETF.

(CoinDesk)

Shares of U.S. crypto-centric companies ticked upward in pre-market trading, riding the momentum of the latest rally in BTC and reflecting the fresh optimism of a spot bitcoin ETF finally being approved in the U.S. Coinbase was up about 4% as of around 6.00 ET, while MicroStrategy, the software developer that holds over 150,000 BTC on its balance sheet, rose almost 5%. Mining firms Marathon and Riot advanced around 9.8% and 6% respectively. Robinhood showed more restrained gains of 2.5%, having dropped 14% on Wednesday after reporting big drops in its revenue and trading activity.

Standard Chartered's venture arm and SBI Holdings are forming an investment company with $100 million backing to target crypto startups. The company will be established in the UAE and focus on firms in market infrastructure, risk and compliance, DeFi and tokenization. Standard Chartered has pivoted its crypto activities toward the UAE in recent months, choosing Dubai as the jurisdiction in which to start safeguarding digital assets for institutional clients in the first quarter of 2024, citing the region's mature regulatory structure relative to other jurisdictions.

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Bitcoin's call-put skew is exhibiting its strongest bullish bias since April 2021, according to data tracked by Amberdata, hinting at further rises in the BTC price.

The skew, which assesses the relative price of calls versus puts expiring in four weeks, has risen above 10% for the first time in 31 months. A call option gives the purchaser the right to purchase the underlying asset at a predetermined price on or before a specific date. A put option gives the right to sell. So a positive skew toward calls implies bullish sentiment.

This would suggest that spot ETF optimism is leading traders to stop selling calls above bitcoin's spot price, a popular strategy to generate additional yield on top of holdings. At the same time, they could be buying call options to have leveraged upside exposure.

As traders have been accumulating call options in recent weeks, market makers have a significant amount of net short exposure above $36,000. With bitcoin above that level, market makers will likely buy BTC to adjust their exposure, thereby accelerating the rally.

- Omkar Godbole