The crypto market has transitioned from a state of “fear” to “neutral,” and currently, it is in a phase of “greed.” Bitcoin’s price surged by over 6% on Tuesday, surpassing the $45,000 mark for the first time since April 2022. The world’s largest cryptocurrency, Bitcoin, reached a 21-month high of $45,386 earlier in the day and was last observed to have risen by 6.43% to $45,317.67. Bitcoin hit a low of around $16,000 approximately a year ago and has since gained over 160% up to today’s value.
The two main coins in the cryptocurrency market at the start of the year, Ethereum and Bitcoin, showed a great deal of stability and have been continuously trading higher and showing little increases. Let us examine the key factors that contributed to the 2023 cryptocurrency market’s upswing and discuss how investors should respond to this unexpected market surge.
Bitcoin is up 6% in the last 24 hours and 171% in the last year. Source: CoinMarketCap
The cryptocurrency market tends to become highly volatile during announcements from the US Federal Reserve. Crypto experts closely monitor these major developments because they can directly impact market liquidity factors. Increasing interest rates have the potential to affect equities, commodities, and cryptocurrencies alike, potentially causing fluctuations in their values.
The surge in Bitcoin’s price comes amid expectations that the US Securities and Exchange Commission (SEC) will approve the launch of a spot Bitcoin Exchange-Traded Fund (ETF). The SEC is need to decide whether to accept or reject the Ark/21Shares ETF by January 10, according to a report from Reuters. The SEC may inform issuers as early as Tuesday or Wednesday if they have been given the go-ahead to debut the following week.
What is Exchange-Traded Fund (ETF)?
A bitcoin spot ETF is a type of exchange-traded fund that aims to provide investors with direct exposure to the current market price of bitcoin. In this context, “spot” refers to the immediate or current price of the underlying asset, which is bitcoin itself.
For instance, data from CME Bitcoin futures indicates investors are anticipating higher BTC prices. As of January 2, these futures were trading at an approximate $1,300 premium to the cryptocurrency’s spot value.
#BITCOIN ETF APPROVAL 🚨
— BITCOINLFG® (@bitcoinlfgo) January 2, 2024
SPOT ETFS ARE COMING WITH BILLIONS OF DOLLARS FLOW IN 🚨
• BLACKROCK IS SEEDING THEIR SPOT #BITCOIN ETF WITH $10 MILLION,
• HASHDEX WITH $2.8 MILLION,
• BITWISE WITH $200 MILLION,
• WISDOMTREE IS SEEDING THEIRS WITH $2.5 MILLION. 👀🔥 pic.twitter.com/nPGqlJ2uNK
Bitcoin Price Technical Breakout
Today’s increase in Bitcoin’s price is also attributed to an upward continuation pattern known as an ascending triangle.
Within an uptrend, ascending triangles typically conclude once the price definitively surpasses their upper trendlines and ascends by an amount equivalent to their maximum height.
As of January 2, BTC’s price had advanced into the breakout phase of its ascending triangle pattern. This suggests that the BTC price is currently aiming for the primary breakout target, which lies below $50,000 within the triangle’s pattern.
BTC Price approaches the target range for the ETF
Data from Cointelegraph Markets Pro and TradingView revealed that the strength in BTC price was increasing as the new year holiday period concluded.
During this time, rumors regarding the ETF were widespread, with discussions speculating on a possible decision arriving ahead of the official approval window, slated to commence on January 4th. According to the statistics provided by CoinGlass, on December 20th, there were over $100 million in liquidated crypto short positions, marking the highest figure recorded in a two-week period. Specifically, BTC short liquidations amounted to $38.5 million during this time.
“Bitcoin is trading like an ETF is about to be approved,” summarized trader, analyst, and podcast host Scott Melker.
As reported by Cointelegraph, estimations regarding the potential peak of BTC/USD amid the ETF focus are targeting around $48,000.
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