Bitcoin and other cryptocurrencies continued their upward trajectory on Monday, surpassing stock market performance, and extending gains from the previous week, as optimism grows around the potential approval of spot Bitcoin exchange-traded funds (ETFs) by regulators. The technical indicators are favorably aligned.
In the past 24 hours, the price of Bitcoin has risen by 2%, pushing past $30,450 after previously hovering near the $31,000 mark. This remarkable surge represents a significant breakout from a previously stagnant trading range of around $26,000, which had persisted for nearly two months. The rally, which commenced ten days ago, has driven Bitcoin prices to their highest level since mid-July.
Alex Kuptsikevich, an analyst at broker FxPro, emphasized the significance of this recent performance, stating,
“Bitcoin has gained over 10% in the last seven days, making the previous week the best in four months… This is a significant turning point. A consolidation above $31,000 could force the bears to capitulate and quickly send the price into the $40,000 area.”
While the Dow Jones Industrial Average and S&P 500 have faced pressure in recent weeks due to an increase in government bond yields, cryptocurrencies have displayed resilience. Typically, higher returns on risk-free U.S. Treasuries tend to reduce the demand for riskier investments. However, Bitcoin has defied this trend, surging amid growing optimism that the U.S. Securities and Exchange Commission (SEC) will soon approve a Bitcoin ETF.
The anticipation of a spot Bitcoin ETF has been looming for several months, particularly after financial giants like BlackRock filed for such funds during the summer. Additionally, crypto asset manager Grayscale secured a crucial legal ruling allowing the conversion of its Bitcoin trust into an ETF.
A spot Bitcoin ETF would hold the actual token, a deviation from existing funds that primarily deal in Bitcoin futures. This development is expected to ignite renewed interest from both retail and institutional investors in digital assets, ultimately supporting cryptocurrency prices.
While the recent rally has been underpinned by hopes of a Bitcoin ETF, it’s important to note that the approval and commencement of ETF trading may still be months away. Furthermore, the vulnerability of the stock market could have implications for the cryptocurrency market, and the extent to which Treasury yields can rise before causing investors to sell Bitcoin during a broader risk-off market shift remains uncertain.
Alex Kuptsikevich underscored this point, stating, “A solid risk-off momentum will almost inevitably trigger institutional selling in crypto.“
Beyond Bitcoin, Ether, the second-largest cryptocurrency, saw a 2% increase, reaching $1,670. Smaller tokens and altcoins also performed well, with Cardano experiencing a 2% surge and Polygon jumping by 8%. Memecoins, including Dogecoin, which rose by 4%, and Shiba Inu, which advanced by 2%, were also in the green.