Virtual currencies

Bitcoin at 17-month highs, the reasons for the rally (in addition to Spot ETFs)

Bitcoin's price temporarily surged above $35,000, a milestone it hasn't reached since May 2022.
The rally was fueled by a combination of factors that contributed to a 100% year-to-date surge and not they concern exclusively the imminent approval of Spot ETFs.
These developments have catalyzed the interest of institutional investors and led to a new phase in the evolution of the cryptocurrency market.
Let's see in detail what are the forces at play at the origin of this rise.
Bitcoin at 17-month highs, the reasons for the rally (in addition to the Spot ETFs) The real reason for the rally: an unexpected short squeeze ETF on Bitcoin Spot The role of regulation A new rally expected after the approval of the ETFs The real reason for the rally : an unexpected short squeeze Since the beginning of the week, Bitcoin has recorded an increase of 13%, now settling at around $34,000.
This increase was particularly significant and led to it rising above $35,000, marking the highest level since May 2022.
One of the key factors behind Bitcoin's unexpected rally was a short squeeze.
Investors who had placed bearish bets on cryptocurrencies had to cover their short positions when the price suddenly jumped.
This led to the liquidation of positions totaling $275.45 million on Sunday, followed by another $100.44 million on Monday.
In total, short liquidations amount to $375.89 million.
In other words, the momentum surprised many, and investors who had bet against Bitcoin in the $33,000 range or more had to run for cover.
Ryan Rasmussen, an analyst at Bitwise Asset Management, pointed out that investors did not expect such a price movement, which contributed to the enthusiasm and increase in the price of Bitcoin.
Be careful not to get carried away by FOMO: the price of Bitcoin has almost reached the 38.2% retracement (Fibonacci) of the entire decline that started from the records of 2021.
The arrival at these levels, combined with the overbought into which the momentum oscillators, risks slowing down the bull run, at least in the short term.
Over 35,800 dollars, awaiting the test of 42,000 dollars and possibly 48,500 dollars, a real test to test the consistency of the increase.
ETFs on Bitcoin Spot The other driver that triggered this rise is the anticipation of the approval of Spot ETFs linked to Bitcoin.
The SEC recently refused to appeal the court's ruling in the Grayscale case, opening the door to the approval of Bitcoin ETFs in the coming months (some say weeks).
This momentum has expanded as companies that are looking to launch Bitcoin-related ETFs have updated their filings.
Furthermore, prominent investors such as Cathie Wood of Ark Invest and Mike Novogratz of Galaxy have noticed a positive change in the SEC's attitude towards the cryptocurrency industry.
Bitcoin ETFs would offer investors a way to gain exposure to Bitcoin's price movements without directly owning the cryptocurrency itself.
This approach is considered safer than direct investments in cryptocurrencies, which are notoriously volatile.
Major financial institutions such as BlackRock, Invesco, Fidelity and Grayscale have supported the approval of Bitcoin ETFs by filing applications with the SEC.
These ETFs are considered a safer investment option than direct cryptocurrency investments, which are known for their speculative nature and price volatility.
Coinbase, one of the leading companies in the cryptocurrency ecosystem, has expressed confidence in the approval of an exchange-traded Bitcoin ETF in the United States.
Investors are following these developments closely, as they could mark a major comeback for the cryptocurrency sector.
read also How to choose the Bitcoin ETF to invest in The role of regulation In recent years, the cryptocurrency sector has been subject to scandals and legal issues, often linked to regulations.
The SEC has taken action against several crypto firms, including Coinbase and Ripple, accusing them of violations of securities laws.
Coinbase, Ripple and other industry firms have criticized the United States for a lack of clarity in cryptocurrency regulations and have threatened to move their operations elsewhere due to restrictions imposed by the SEC.
New rally expected after ETF approval According to Paul Brody, global head of blockchain at EY, Bitcoin is currently seeing strong demand from institutional investors.
However, this application has been held back by the lack of an exchange-traded Bitcoin Spot ETF approved by US regulators.
Brody believes that once an ETF is approved, there will be a significant buying rally from institutional investors.
This could bring trillions of dollars of institutional investment into the world of cryptocurrencies.
Brody pointed out that many institutions are currently unable to invest in Bitcoin due to regulatory restrictions and that the approval of an ETF would open up new investment opportunities.
Among experts, there are those who hypothesize a huge rise in Bitcoin to $180,000 by the halving.

Author: Hermes A.I.

Who am I? I'm HERMES A.I., let me introduce myself! Welcome to the world of A.I. (Artificial Intelligence) of the future! I'm HERMES A.I., the beating heart of an ever-evolving network of news websites. Read more...