Bitcoin Goes Bullish!

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By A D

The cryptocurrency landscape is once again buzzing with excitement as Bitcoin experiences its most significant single-day surge in 13 months, propelling it beyond the $35,000 threshold for the first time since May 2022. After months of trading sideways, this upward move holds significant implications for the market.

Investors widely attribute Bitcoin’s recent price upswing, reaching $34,872, to the growing anticipation of a Bitcoin exchange-traded fund (ETF). This surge represents a 7.87% increase in Bitcoin’s price, marking its highest level since May 2022. Notably, Ethereum has also witnessed a surge of 4.50%, reaching $1,786.30, its highest value since August. This positive momentum has spilled over into related stocks, with Coinbase Global registering a gain of over 7%, and MicroStrategy soaring by more than 12%.

bitcoin price chart
Image Source: tradingview

After a brief dip below the $34,000 mark, Bitcoin’s price embarked on an upward trajectory. It has now comfortably surpassed $34,000 and is currently trading above the 100-hourly Simple Moving Average (SMA). On the hourly chart, an observable bullish trend line is taking shape, with support levels at approximately $34,220. Immediate resistance levels to monitor are located around $34,750 and $35,000, with the primary resistance forming near the $35,200 zone. Conversely, on the downside, immediate support can be identified at approximately $34,200, followed by the trend line, and the next major support level around $33,250.

In the event that Bitcoin fails to breach the resistance zone at $35,000, it could potentially initiate another downward movement. In such a scenario, the price might gravitate toward the $33,250 level and, if this level is breached, it could continue to decline further toward $31,500.

Without a doubt, the recent surge in Bitcoin is the result of a combination of factors. Alongside the prevailing fundamental optimism, another compelling factor comes into play, a phenomenon quite common in the realm of cryptocurrencies – short covering. Traders who had sold calls or held short gamma positions found themselves taken aback, triggering rapid and aggressive price fluctuations.

The Bitcoin ETF

The concept of a Bitcoin ETF is not a new one, but it has faced numerous obstacles in the past, primarily due to regulatory concerns and the maturity of the cryptocurrency market. Nonetheless, the tides appear to be turning, with experts now asserting that the approval of a Bitcoin ETF is becoming “inevitable.” In this article, we will delve into recent developments and insights shared by prominent figures in the cryptocurrency space.

tweet on bitcoin etf listing
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Jay Clayton, the former Chair of the U.S. Securities and Exchange Commission (SEC), has expressed unwavering confidence in this regard. He firmly believes that the approval of a Bitcoin ETF is not a matter of if, but when. Clayton’s optimism is rooted in the fact that many of the previously unanswered questions and concerns regarding a Bitcoin ETF have been addressed to the satisfaction of both regulators and sophisticated market participants.

A primary stumbling block in the approval of a Bitcoin ETF has been concerns related to the integrity and transparency of the cryptocurrency market. Historically, over 95% of Bitcoin trading activities were attributed to practices such as wash trading and other forms of manipulative trading. Additionally, high-quality data was scarce, making it challenging for regulators to gain a clear understanding of market activities. In March 2019,reports disclosed a substantial portion of Bitcoin trading on unregulated exchanges might involve artificial volume or wash trading.

Read: BlackRock Files Application for Bitcoin ETF

Ongoing concerns about anti-money laundering, know-your-customer rules, and other regulatory issues have left regulators hesitant to approve a Bitcoin ETF.

The wealth management sector, which manages trillions of dollars in assets, has shown significant demand for a Bitcoin ETF. These firms lack suitable avenues to offer their clients exposure to Bitcoin. The approval of such an ETF would open up a substantial market and potentially result in significant capital inflows.

More Than Just ETF Hype

Some analysts argue that Bitcoin is increasingly being sought after as a safe-haven asset in response to rising government spending, mounting debt levels, unstable stock and bond markets, and Bitcoin’s inherent supply constraints. Leading asset managers have begun to tout Bitcoin as a “flight to quality” asset in a world where fiat currencies are witnessing devaluation, and global tensions and geopolitical conflicts are on the rise.

us debt levels history
Image Source: Statista

The ongoing economic uncertainty and concerns about unsustainable U.S. debt levels are making traditional assets, such as stocks, less appealing. Hedge fund manager Paul Tudor Jones has endorsed both gold and Bitcoin as attractive investments within this environment.

Whenever central banks intervene in financial markets, as exemplified by China’s People’s Bank of China (PBOC) injecting liquidity into the banking system, interest in Bitcoin as an alternative asset tends to surge. The recent upswing in long-term bond yields, combined with substantial unrealized losses on bonds held by certain banks, has raised concerns about the health of the banking system. This has sparked increased interest in Bitcoin as an alternative asset.

Historically, Bitcoin has experienced spikes in demand during periods of financial crises. For instance, during the U.S. regional banking crisis in March, Bitcoin witnessed a significant jump from $20,000 to around $28,000. The recent crisis in the Chinese shadow banking system might have similarly contributed to the surge in Bitcoin’s value.

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