News
James B. Bell
- October 23, 2023
Bitcoin and other cryptocurrencies have seen a steady climb in value, surpassing stock performance and extending the gains from last week. This surge in value is fueled by the hopes that spot Bitcoin exchange-traded funds will soon receive approval from regulators.
Positive Technical Outlook
The technical analysis for Bitcoin is showing promising signs as the price of the cryptocurrency has risen by 2% over the past 24 hours, reaching above $30,450. Initially, it was trading closer to $31,000. This surge is significant as Bitcoin has managed to break out from a stagnant trading range of around $26,000, which had lasted for nearly two months.
According to Alex Kuptsikevich, an analyst at broker FxPro, the previous week marked a turning point for Bitcoin with a gain of over 10% in just seven days, making it the best week in four months. Kuptsikevich believes that if Bitcoin consolidates above $31,000, it could force bearish investors to capitulate and quickly drive the price to the $40,000 level.
Cryptos vs. Traditional Investments
Despite recent pressure on the Dow Jones Industrial Average and S&P 500 due to a surge in government bond yields, cryptocurrencies have remained resilient. Typically, higher returns on risk-free U.S. Treasuries decrease the demand for riskier investments. However, Bitcoin has defied this trend and surged in value. This resilience is driven by optimism surrounding the Securities and Exchange Commission's (SEC) potential approval of a Bitcoin exchange-traded fund (ETF).
In conclusion, Bitcoin's performance has surpassed traditional stocks in recent times. With the possibility of the SEC approving a Bitcoin ETF, the future looks bright for cryptocurrencies. Investors are eagerly awaiting further developments in this exciting market.
The Future of Bitcoin ETFs
The anticipation for a spot Bitcoin ETF has been growing in recent months. Financial powerhouses like BlackRock have filed for such funds, and crypto asset manager Grayscale's legal victory over the conversion of its Bitcoin trust to an ETF has further fueled the speculation. Unlike existing funds that hold Bitcoin futures, a spot Bitcoin ETF would hold the token itself. This development is expected to bring about a new wave of interest from both retail and institutional investors in digital assets, ultimately providing support for prices.
Bitcoin ETF hopes have played a significant role in the recent rally, amplified by positive news regarding the Grayscale conversion. While the technical aspects of prices remain favorable, it may take several more months before this catalyst materializes into an ETF that can be traded. Furthermore, the ongoing vulnerability of stocks poses a potential threat to the crypto market. Additionally, investors are questioning how high Treasury yields can climb before they begin to sell their Bitcoin holdings due to broader risk-off sentiment.
According to Kuptsikevich, "A significant risk-off momentum is likely to trigger institutional selling in the crypto market."
In addition to Bitcoin, Ether, the second-largest cryptocurrency, experienced a 2% increase, reaching $1,670. Smaller tokens, commonly referred to as altcoins, also fared well. Cardano saw a 2% surge, while Polygon witnessed an 8% jump. Memecoins, such as Dogecoin (4% increase) and Shiba Inu (2% increase), were also in the green.
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