In a remarkable turn of events, Bitcoin’s price has soared to a two-month high of $29,450, marking a substantial 3.3% increase within the last 24 hours. This surge has been fueled by a confluence of factors, with four primary drivers taking center stage in the ongoing discussions.
- Anticipation of a Spot Bitcoin ETF Approval
Excitement within the cryptocurrency community is palpable as rumors gain momentum about the possible approval of the first-ever spot Bitcoin ETF by the US Securities and Exchange Commission (SEC). Notably, the SEC is actively engaging with prominent applicants such as Grayscale, BlackRock, Fidelity, Invesco, and Ark Invest, a remarkable departure from the historical trend of Spot Bitcoin ETF rejections. Market sentiment seems to be cautiously pricing in or “front-running” the potential approval of a spot ETF.
Adding to the fervor, BlackRock filed an updated ETF application recently, further igniting hopes for approval. As Bloomberg ETF expert James Seyffart explained, “BlackRock filed an updated Bitcoin ETF prospectus early this morning, likely in response to SEC comments, similar to what we’ve seen from Ark, Fidelity, and others. This reaffirms that issuers are actively in discussions with the SEC.“
Market forecasts for an approved spot Bitcoin ETF are overwhelmingly bullish. Macro analyst Alex Kruger predicts a price surge of over 20% on the approval day, while trader Christopher Inks sets a target range between $38,000 and $40,000. A recent CryptoQuant report suggests that Bitcoin spot ETFs could potentially inject up to $1 trillion into the market, noting that “if $150 billion in fresh capital enters the Bitcoin market, it could increase BTC’s market cap by $450 billion to $900 billion.” Meanwhile, research from Matrixport projects a post-SEC approval Bitcoin price range between $42,000 and $56,000, focusing on BlackRock’s ETF.
- Impact of Jerome Powell’s Recent Speech
Federal Reserve Chair Jerome Powell’s recent remarks have undoubtedly influenced the crypto markets. Powell indicated the possibility of the central bank pausing its historic series of interest rate hikes, provided there is steady progress on inflation and rate hikes may be put on hold. He emphasized the significance of the 2% inflation target and addressed the delicate balance between avoiding a potential recession and managing inflation.
Market forecasts currently suggest that the Fed will refrain from raising interest rates at the upcoming Federal Open Market Committee (FOMC) meeting scheduled for October 31 to November 1. This stance from the Fed has likely provided a bullish boost to Bitcoin and the broader cryptocurrency market.
- Bitcoin’s Correlation with Gold
The price of gold has witnessed a notable increase, rising by 1.3% yesterday and an impressive 10% since October 6. This upward movement in the gold market often serves as a leading indicator for Bitcoin. Investors turn to Bitcoin as a hedge against uncertainty in the US government bond market, global crises, and geopolitical tensions, particularly in times of war.
Charles Edwards, founder of Capriole Investments, underscored this trend, noting that “The market is beginning to factor in the Fed’s tightening policies and weakening economic conditions. Coupled with geopolitical tensions and the prospect of future quantitative easing (QE), demand for insurance assets like Gold and Bitcoin is surging. When both of these assets move in tandem, it often signifies the start of a significant trend.”
- Liquidation of Short Positions
Data from Coinglass indicates that approximately $21 million in Bitcoin short positions were liquidated during the recent price surge. The futures market has played a crucial role in driving this upward price movement.
Renowned crypto trader CrypNuevo commented, “All our liquidation levels to the upside from yesterday have been hit. Asia’s buying spree resulted in liquidations at the same levels.” However, he also issued a word of caution, pointing out that the current long-short open positions ratio is significantly skewed toward long positions.
As of the latest update, Bitcoin experienced a slight retracement and was trading at $29,233.
