In a whirlwind of digital currency trading, Bitcoin has once again defied expectations by shooting over the $36,000 mark. The surge has traders, investors, and onlookers buzzing with theories and speculation. Why is Bitcoin’s price climbing so rapidly? Is there a recent wave of investor confidence, or is something else at play?
After months of a bear hug on the market, this recent Bitcoin price resurgence has come as a breath of fresh air for those holding onto their digital wallets. The excitement isn’t just about the numbers—it’s about the stories and the forces driving those numbers up. It could be due to the market’s shift in sentiment amid ETF hype, SEC’s advancements in crypto, or perhaps a shift in the on-chain trends.
This surge has also ignited a renewed interest in the cryptocurrency space. With Bitcoin leading the charge, the surge brings with it a flurry of activity as new investors scramble to get a piece of the action, and seasoned veterans keenly analyze charts to predict what will happen next. In this Cryptopolitan guide, we’ll find out the genuine reasons behind the latest surge and whether the BTC price holds the momentum to surge further.
Bitcoin’s Highest Level Since May 2022
Cryptocurrency markets faced a grueling challenge in 2022, with premier digital currencies like Bitcoin and Ethereum suffering from a severe downturn. Bitcoin, the world’s top cryptocurrency, saw a staggering 65% plunge in market value over the year. The landscape was rocked by unforeseen calamities, including the Terra Luna debacle and the collapse of the FTX exchange, all amid a storm of macroeconomic instability, catching crypto advocates by surprise.
However, the narrative began to shift at the onset of 2023, hinting at a potential comeback for the beleaguered crypto sphere. In a positive twist, Bitcoin exhibited modest gains, averaging a 0.39% increase in July, climbing to an approximate value of $31,000. Fast-forwarding to the beginning, Bitcoin stands valiantly at $35K, boasting a market cap of $673 billion and a trading volume that has swelled to $20 billion. This recovery paints a promising picture for the crypto community, signaling a recovery that may well define the trajectory for the rest of the year. This recent gain has been significant since May 2022, as several macro events helped BTC price to break above crucial resistance levels over the last few weeks.
Theories Behind The Bitcoin Price Resurgence
In the crypto universe, consensus is as elusive as ever, especially for pinpointing the reasons for Bitcoin’s latest price rally. Enthusiasts argue over a variety of potential triggers. One camp of optimists is betting on the imminent approval of spot bitcoin ETFs by U.S. regulators, a move that would simplify bitcoin investment as much as trading stocks through a brokerage account. “There’s a huge backlog of demand for these,” asserts Matthew Sigel from VanEck, a company eagerly waiting in the wings with its application for such an ETF. Additionally, Grayscale’s victory against the SEC and Blackrock’s DTCC listing have boosted BTC’s price.
Even political events seemed to sway the cryptocurrency’s value, with some attributing the uptick to Congressman Tom Emmer’s initial House Speaker run, noting that bitcoin’s ascent persisted even after he stepped down from the race.
Alternatively, the buzz around bitcoin’s “halving” event, which slashes miners’ rewards and tightens the currency’s supply, has further fueled the fire, promoting the narrative of bitcoin as a finite and valuable asset.
Bobby Zagotta of Bitstamp USA captures the prevailing mood, suggesting that people are “searching for reasons to believe” and “signs of health” in the volatile crypto market, which had been dormant in terms of volatility and trade volume through a tranquil summer.
Amidst these theories, one fact remains indisputable: Bitcoin is unpredictable and speculative, with price swings that can be as rapid as they are extreme. Nonetheless, the market is stirring once again, awakening from a period of inactivity with a noticeable upward momentum.
BTC’s Help In Rallying Several Stocks
The recent upswing in Bitcoin’s price has not only rejuvenated the cryptocurrency itself but has also sparked a rise in crypto-related equities and a variety of other digital tokens. Coinbase Global, a major cryptocurrency exchange, experienced a surge in its shares in October, although these gains were later relinquished. Despite a robust double in value this year, Coinbase’s share price remains 80% below its peak in 2021. The exchange has a stake in the potential success of spot bitcoin ETFs, having been named as the custodian for several asset managers vying to launch these funds. Coinbase’s role would involve the secure storage of Bitcoin for these ETFs and the collection of custodial fees based on the assets under management.
However, the future of Coinbase is tainted with uncertainty. The SEC sued the company in mid-2023, accusing it of failing to comply with securities regulations.
Other companies are also riding the wave of crypto’s renewed vigor. MicroStrategy, known for its hefty Bitcoin treasury, has seen its stock value increase by 20% in the past few weeks. Bitcoin mining companies like Marathon Digital and Riot Platforms have seen their shares leap by 14% and 7.6%, respectively.
Meanwhile, the revival isn’t limited to Bitcoin alone. Other digital currencies, such as Ethereum, Dogecoin, and Solana, have been enjoying their moments in the sun, posting impressive gains in the broader market rally.
The Grayscale Bitcoin Trust, the heavyweight champion of bitcoin funds, is in the queue for a green light to transition into a spot bitcoin fund. At present, it’s dealing at a 16% markdown from the actual worth of the Bitcoin stash it manages. This is a marked improvement from a steep 42% gap in mid-June and an even wider chasm of nearly 50% at the close of the previous year, data from YCharts highlights. The shrinking differential is being interpreted by cryptocurrency advocates as a promising sign that could foretell the fund’s approval by regulators.
A legal push in August saw an appellate court nudge the SEC to take another look at Grayscale’s pitch, pressing for a verdict based on an updated rationale.
In terms of performance, the shares of the fund have enjoyed a recent uptick, climbing by 10% over the last few weeks. The leap forward is even more pronounced when looking at the fund’s journey through the year—it has seen its value more than tripled since the year’s start, sparking optimism among investors about its prospects.
A Record Surge In Open Interest (OI)
Now second only to Binance for Bitcoin futures open interest, the Chicago Mercantile Exchange (CME) has risen in the ranks as a major player among BTC futures trading platforms.
With a substantial leap to $3.58 billion in open interest as of October 30, the CME has climbed two notches in just one week, surpassing rivals Bybit and OKX, which reported open interests of $2.6 billion and $1.78 billion, respectively. Nipping at the heels of Binance’s leading $3.9 billion, the CME’s position is robust evidence of its growing influence in the Bitcoin futures market.
CME distinguishes its offerings with a standard Bitcoin futures contract pegged at five BTC and a micro futures contract valued at one-tenth of a Bitcoin. Unlike the perpetual futures preferred in offshore exchanges—which operate without an expiry date and align prices with the underlying market using the funding rate—CME maintains a traditional approach to futures contracts. This distinction positions the CME as a preferred venue for those seeking regulated futures trading, affirming its status as a top destination for institutional and retail investors alike.
The term “Bitcoin open interest” paints a picture of the total active Bitcoin futures or options contracts yet to be settled in the market. It’s a gauge for tracking the total amount of capital poured into Bitcoin derivative products at any moment. Think of open interest as a meter for the money tide—rising when more funds swim into Bitcoin futures, and ebbing when they withdraw. A surge in open interest suggests that market sentiment is bullish, with investors betting on future gains, while a drop can hint at a bearish mood, pointing to a potential decline in prices.
The Chicago Mercantile Exchange (CME) has seen its open interest soar, pushing it to a prestigious runner-up position among crypto futures exchanges worldwide. This growth is underscored by its cash-settled Bitcoin futures contracts, which recently crossed the 100,000 BTC mark in trading volume. With this spike in trader activity, the CME has captured a 25% slice of the global Bitcoin futures market.
Interestingly, the influx of funds at CME has been driven largely by its standard futures contracts. This trend signals rising institutional interest, corresponding with Bitcoin’s impressive performance in October, which saw the cryptocurrency hit a soaring one-year high above $35,000. It’s this wave of institutional money that’s partly credited with fueling Bitcoin’s recent price rally, reflecting growing confidence among seasoned investors in the cryptocurrency’s value
The Bitcoin options arena has been bustling since October 24, smashing through previous records to set new benchmarks. According to analytics from Glassnode, the aggregate of all active put and call options soared to a staggering $16.35 billion, outpacing the former high-water mark of $14.15 billion set in March of this year.
This surge of investment corresponds with a bullish breakout in Bitcoin’s price, which vaulted over the $31,500 mark in July, ascending to heights not seen in a year. The rally kicked into high gear the day before, on October 23, with Bitcoin’s value jumping over 10% from a base of $30,000 to a commendable closing figure of $33,000. This swift uptick has turned heads and opened wallets, as investors have piled into derivative positions to capitalize on the cryptocurrency’s accelerating upward momentum.
Bitcoin Price Resurgence Is Not Inflated
Bitcoin has recently wrestled with the $36K ceiling, encountering determined opposition at that level. Despite this resistance, the market value to realized value (MVRV) ratio suggests considerable room for growth before Bitcoin hits traditionally overvalued territories, pointing to potential for interesting price developments shortly.
According to CryptoQuant, the current MVRV ratio stands at 1.67, which falls significantly short of the 3.5 threshold typically associated with the zenith of market cycles. This metric, which compares the current market cap of Bitcoin against the price at which each bitcoin last moved, implies that Bitcoin’s recent rally to yearly highs has not pushed its valuation to the extremes seen in previous market upswings. This data gives traders and analysts reason to believe that there’s still a fair stretch before Bitcoin enters an overvalued phase by historical standards.
In the story of Bitcoin’s bull runs, the pinnacle moments are often around a market value to realized value (MVRV) ratio of 3.5. With the ratio currently at 1.67, it leaves room to speculate that the upward trend might not have reached its full stride yet.
The total market capitalization of Bitcoin captures the combined value of all bitcoins in circulation, based on the running average price found across significant exchanges. Meanwhile, the realized value offers a closer look at the market’s perceived worth by adding up the last known transaction price of every bitcoin when it was last moved on the blockchain.
When the MVRV ratio scales too high, it can be a tip-off that Bitcoin’s price is ballooning beyond its intrinsic value, reflecting market exuberance. Conversely, a dip in the ratio might signal that Bitcoin is undervalued, potentially being a buy signal for investors. Essentially, high MVRV ratios are like red flags of market overheating, and low ratios could mean that Bitcoin is in cooler waters, perhaps undervalued and poised for a pickup.
Bitcoin Halving And ETF Hype
Crypto enthusiasts are setting their sights on 2024 with optimism, thanks to the anticipated Bitcoin halving event scheduled for that year. Occurring once every four years, this event slashes the rewards for Bitcoin mining by half—next time, miners will earn just 3.125 BTC per verified block instead of the current 6.25 BTC. This reduction is generally celebrated in the crypto community because it tightens Bitcoin’s fresh supply, creating an environment that can lead to price appreciation. Looking back, previous halvings have often been precursors to bullish trends in Bitcoin’s market value, stirring up investor enthusiasm for a potential increase in momentum following the upcoming event.
Coinbase’s Chief Legal Officer, Paul Grewal, has expressed optimism about the approval of a U.S. Bitcoin exchange-traded fund (ETF) by the Securities and Exchange Commission. In conversation with CNBC’s Arjun Kharpal, Grewal conveyed his hopefulness, stating, “I’m quite hopeful that these [ETF] applications will be granted, if only because they should be granted under the law.” His confidence stems from the legal underpinnings that, in his view, warrant the green light for such applications.
The crypto world is abuzz with news that Hong Kong authorities are considering the introduction of a spot cryptocurrency exchange-traded fund (ETF), a move that contrasts with the ongoing regulatory resistance facing similar products in the United States.
Julia Leung, the CEO of Hong Kong’s Securities and Futures Commission (SFC), has indicated that the region may open the doors for retail investors to engage with spot cryptocurrency ETFs, provided that they satisfy regulatory standards. This development, as reported by Bloomberg on November 5, marks a significant step for the city amid rigorous debates over such financial products.
This move by Hong Kong could signify a shift in the global landscape of cryptocurrency investment products, as American firms are actively vying to introduce comparable spot ETFs amidst stiff resistance from the U.S. SEC.
To date, both Hong Kong, and the U.S. have sanctioned ETFs that are tied to cryptocurrency futures contracts, yet neither has approved any for spot trading. Spot Bitcoin ETFs differ from their futures counterparts by holding actual Bitcoin, which provides direct price exposure to the digital asset for investors. As a result, Bitcoin price will record more gains in the coming months.
Conclusion
Bitcoin trading activity has seen a resurgence, bouncing back from September’s slump, which marked the year’s lowest point in trade volume. As trading volume increases, so does market liquidity, improving the odds for investors to execute transactions at their desired prices promptly. This recovery has bolstered Bitcoin’s position as the leader of the cryptocurrency pack, with its market capitalization currently at around $660 billion, making up over half of the entire $1.25 trillion cryptocurrency market valuation.
The price of Bitcoin, now hovering around $34,000, has witnessed a remarkable rally, doubling in value over the year, although it’s still a significant drop from its all-time high of nearly $69,000 in November 2021. Bitcoin’s comeback to its May 2022 standing represents a full circle from the tumultuous events that shook the market, including the obliteration of $40 billion in value from certain cryptocurrencies, the collapse of multiple crypto lending firms, and the notorious downfall of the FTX exchange.
