Bitcoin Rallies 22% Past Week, But Is The Rally Sustainable?
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Bitcoin Surges Amid Anticipation of a U.S. BTC ETF Approval
On Monday, Bitcoin (BTC) witnessed an impressive surge, racing past $35,000, marking its highest price since May 2022. This significant uptick is part of a broader October bull run in the cryptocurrency markets, driven largely by the mounting optimism that a Bitcoin ETF will soon receive the nod in the U.S. The added pressures of global conflict, further the argument that Bitcoin is a hedge against global turmoil and a “flight to safety” asset.
By the end of the 24-hour period, Bitcoin had slightly retracted, registering a still-impressive 11% growth, topping the rally above $34,000. The broader cryptocurrency market seemed to echo this optimism, with several indicators hinting at a bullish sentiment.
Are we getting the long-awaited Bitcoin ETF?
The burning question on everyone's mind is the potential approval of the much-anticipated Bitcoin ETFs in the U.S. BlackRock's eagerly watched spot bitcoin ETF, named the iShares Bitcoin Trust, has already made its presence felt by appearing on a list curated by the Depository Trust and Clearing Corporation. As reported by Nasdaq, DTCC is responsible for post-trade clearance, settlement, custody, and related information services. While this doesn't imply an immediate approval, it's noteworthy that the DTCC lists BlackRock's fund ticker as IBTC.
Bloomberg's senior ETF analyst, Eric Balchunas, shared his observations on this development, stating, "This is the first spot ETF listed on DTCC, none of the others on there (yet)." He further commented, "Definitely notable that BlackRock is leading the charge on these logistics (seeding, ticker, DTCC) that typically occur just before launch. It's hard not to interpret this as them receiving a signal that approval is virtually certain or imminent."
A significant driver of the Bitcoin optimism is the buzz around potential Bitcoin ETFs in the U.S. Recent days saw heightened anticipation following a court ruling in favor of Grayscale. This ruling hints at the possibility of converting the prominent bitcoin trust, GBTC, into an ETF.
However, some market analysts offer a word of caution amidst this bullishness.This suggests the price surge might be purely driven by anticipation of positive news, which might not be the most stable foundation in the short term.
Bitcoin Scarcity and Long-Term Investors
Bitcoin's price movements aren't just a mere response to market speculations. A deeper dive into on-chain analytics points towards an increasing scarcity of the cryptocurrency. Data from IntoTheBlock reveals that a whopping 80% of the Bitcoin supply is now held by long-term investors.
The Institutional Landscape and Bitcoin's Future
One of the most awaited triggers for Bitcoin's next surge is the potential approval of a spot Bitcoin ETF in the United States. The financial regulator, the Securities and Exchange Commission (SEC), has yet to green-light any spot Bitcoin ETF, but the landscape might be changing.
Several prominent companies, including Grayscale Investments, ARK Investment, BlackRock, and Fidelity, are in the queue, having submitted their Bitcoin ETF offerings to the SEC. Experts are optimistic about an approval coming through by early 2024, which they believe could unlock significant institutional demand.
BlackRock's eagerly awaited iShares Bitcoin Trust, a proposed spot bitcoin ETF, recently featured on a roster overseen by the Depository Trust and Clearing Corporation (DTCC). Notably, it's listed under the ticker IBTC. As an essential entity in the financial world, DTCC provides a myriad of services including post-trade clearance, settlement, and custody, as highlighted by Nasdaq.
The Securities and Exchange Commission (SEC), the regulatory body overseeing such financial instruments, has yet to green-light a spot bitcoin ETF. Amid this anticipatory phase, the appearance of the iShares Bitcoin Trust on DTCC's list stands out, especially given its absence of other spot ETFs.
Is the Rally Sustainable?
Although it is difficult to argue with the upward moment of the crypto markets, some traders are urging caution and a possible correction towards $27,000 before resuming the bullish trend.
This Week By the Numbers 📈
FTX prepares assets on the exchange for imminent sale
Bitcoin's open interest on CME skyrockets with a 70% increase over the past week.
Underperformance of altcoins could indicate the onset of a classic bull market
Reddit co-founder, Alexis Ohanian, champions Bitcoin as the modern gold
Post-ETF predictions by Galaxy project a substantial 74% growth potential for Bitcoin
CFTC Commissioner voices confidence that the market is primed for a Bitcoin ETF
Current U.S. mortgage payments have surged to levels 52% higher than rent
Bank stocks face a downturn following lackluster earnings reports
Top Stories 🗞️
FTX founder Sam Bankman-Fried will take the stand to testify in his own defense, his attorney said in a conference call Wednesday. The decision by his legal team sets him up for a cross-examination by federal prosecutors, who will be able to press him on the collapse of his crypto exchange FTX. Bankman-Fried’s decision to testify came after federal prosecutors and his defense team were able to secure the alleged fraudster an adequate supply of his ADHD medication. His defense had previously argued before the court that inadequate access to the medication impugned his ability to participate in his defense.
Chinese shares fell to the lowest level since before the Covid-19 pandemic, as Beijing’s latest efforts to prop up the country’s stock market failed to stem a sell-off driven by slowing economic growth, a liquidity crisis in the property sector and geopolitical tensions. The CSI 300 index of large and liquid Shanghai- and Shenzhen-listed stocks fell as much as 1.3 per cent on Monday to about 3,463, marking the equity benchmark’s lowest level since 2019. The gauge has fallen about 15 per cent so far this year, in dollar terms. Chinese equities outperformed global markets early in the pandemic and staged a rally at the start of this year on hopes of a rebound from disruptive zero-Covid policies.
S&P Dow Jones Indices on Tuesday rolled out five new cryptocurrency index products, the first major expansion of its digital assets benchmarking tools since entering the market in May. Headlining the tranche is a “broad digital market,” or BDM, index that includes over 240 coins, a press release said. “The new subindices also provide different slices and dices of the BDM by market cap so that investors can track different segments of the market,” an S&P spokesperson told CoinDesk. It’s not exactly clear from which assets BDM and its subsets build their market “snapshot.”
Coinbase Global Inc. (COIN) is set to make its final case on Tuesday that a judge should spring it from the clutches of the U.S. Securities and Exchange Commission (SEC) in its unregistered-securities dispute. In Coinbase's last word on its motion to get the accusations tossed before trial, a person familiar with the plan said the company will double down on familiar arguments: The SEC hasn't demonstrated the transactions were investments contracts (and thus, securities), because it hasn't shown any actual contracts existed, and the SEC is violating the "major questions doctrine" that basically holds that federal agencies have no business regulating novel areas that are awaiting congressional action.
Pentagon Belatedly Reveals Two Dozen US Personnel Were Wounded In Spate Of Drone Attacks In Iraq, Syria
The Pentagon revealed in a late Tuesday statement that in just the past week, US and coalition forces have been attacked at least ten times in Iraq, as well as three times in Syria "via a mix of one way attack drones and rockets," according to Brig. Gen. Pat Ryder, speaking to NBC. But the real bombshell development, which Biden's defense officials have apparently sat on for several days, is that some 24 US personnel were wounded in the attacks. According to the NBC statement: Two dozen American military personnel were wounded last week in a series of drone attacks at American bases in Iraq and Syria, U.S. Central Command told NBC News on Tuesday.
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About the Author: Tatiana Koffman
Hi there and thanks for reading! If you stumble upon my newsletter, you will notice that I write about money, economics, and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital, and Cryptocurrencies. I write to make financial topics more accessible and create equal opportunity for the next generation of investors. I have personally invested in 20+ companies and funds (👉 my portfolio).