Bitcoin’s value has surged back to a remarkable $46,000, energized by a flurry of activity around spot exchange-traded funds (ETFs). BlackRock Inc., Ark, and several other potential ETF issuers have filed amended forms, sparking widespread anticipation and driving up Bitcoin’s price. This resurgence comes after a period of notable growth last year, where the pioneering digital currency soared almost 160%, buoyed by expectations that the U.S. Securities and Exchange Commission (SEC) would greenlight these ETF applications.
The ETF Effect on Bitcoin’s Valuation
The buzz around Bitcoin ETFs has had a tangible impact on the cryptocurrency’s valuation. Fidelity, Invesco, Galaxy Digital, and WisdomTree are among the financial powerhouses that have amended their S-1 applications with the SEC. The deadline for the SEC’s decision on these applications is fast approaching, and the crypto community is abuzz with speculation about a potential batch of approvals. The belief that the SEC will soon announce its decisions has further fueled Bitcoin’s price surge.
Standard Chartered, a global banking behemoth, has projected that Bitcoin could skyrocket to nearly $200,000 by the end of 2024, assuming successful U.S.-listed spot Bitcoin ETFs. This bold prediction is based on an estimated 437,000 to 1.32 million Bitcoins being held in these ETFs. Geoff Kendrick, head of digital assets at Standard Chartered, and Suki Cooper, a precious metals analyst, expect an influx of $50-100 billion into the market if these ETF-related inflows materialize as anticipated.
Network Strength and Market Sentiment
Jamie Coutts, a blockchain strategist at Pragmatic Blockchain Research, highlighted Bitcoin’s strengthened network fundamentals as another key factor driving its price. Despite being 40% below its peak, Coutts emphasized that Bitcoin’s network fundamentals are at an all-time high. This is partly due to novel use cases like inscriptions, lending credence to the assertion that Bitcoin is currently undervalued.
On the other hand, Bloomberg Intelligence’s senior macroeconomic strategist Mike McGlone expressed caution. While acknowledging Bitcoin’s recent rally, McGlone warned of potential risks, especially if the market’s current optimism around Bitcoin ETFs doesn’t translate into long-term sustainable growth. He advised against overcommitment in the current climate, suggesting that the market might be at a peak of bullishness.
The daily price chart for Bitcoin shows a consolidation above the $40K level, with a steady climb towards the $48K resistance zone. The Relative Strength Index (RSI), hovering above 50%, indicates a momentum favoring buyers, suggesting a potential rally towards the $48K level.
On the 4-hour chart, Bitcoin’s price action has been volatile, oscillating between $40K and $45K. However, the cryptocurrency is now breaking above the $45K resistance level, setting the stage for a possible bullish run towards the pivotal $48K mark.
In the futures market, the Bitcoin funding rates metric offers insights into market sentiment. Despite a recent correction, the funding rates remain positive, suggesting that the market’s outlook is still bullish and that the current trend could be sustainable.
In the end, Bitcoin’s resurgence to $46,000 amid the frenzy around spot ETFs is a testament to its enduring appeal and the market’s optimism about its future. While some experts like Standard Chartered forecast a meteoric rise, others urge caution, highlighting the inherent volatility and risk in the cryptocurrency market. As Bitcoin approaches key resistance levels, its response will likely shape the mid-term trajectory for both the currency and the wider crypto market.