Bitcoin (BTC) price is up today, topping $42,866 after dipping as low as $40,300 over the weekend. The rally highlights traders continued bullish bias for Bitcoin, which produced the best November performance since 2020 and remains on a bullish trajectory in December.
The bounce back above $42,000 comes amid $4 billion BTC being sold in two days, setting an 18-month high. The recovery may show the markets belief that a spot BTC exchange-traded fund (ETF) will be approved in January 2024, and the expectation of approval is matched with significant cash inflows from institutional investors.
Now that BTC has notched its best monthly close in 19 months, lets look into the reasons why Bitcoin price is up today.
Initially, Bitcoin price flashed mixed signals after former Binance CEO Changpeng CZ Zhaos guilty plea, and the exchange agreed to pay a $4.3 billion settlement to the U.S. Department of Justice (DOJ) on Nov. 21. After taking some time to digest the outcome, the market began to notice that Binance exchange was not having a mass exodus of funds like FTX did when its liquidity crisis first became public. Leaders in the crypto market, like Galaxy Digital CEO Mike Novogratz, see the settlement as a net positive overall.
The fear surrounding centralized exchanges seems to have all but vanished. Bitcoin exchange trading volume hit a 6-month high on Dec. 11. Despite having the lowest amount of volume for the month on Dec. 10, BTC trading spiked, accounting to over $16.4 billion the proceeding 24-hours.
The lack of a major exodus from Binance coupled with increased exchange trading volume highlights renewed bullish optimism.
Despite a bevy of macro headwinds, Bitcoin price continues to push higher, achieving a 153.5% year-to-date gain with volatility increasing. Some Bitcoin analysts believe the Binance and DOJ settlement is bullish for a spot Bitcoin ETF approval, noting a similar deal achieved by Arthur Hayes and BitMEX.
The potential of a spot Bitcoin ETF approval has led to hodling, which remains 70% of the total available Bitcoin supply.
While some analysts believe the Bitcoin price is pointing toward a breakout to $50,000, BTC has already more than doubled the 2023 returns of gold
The positive sentiment around Bitcoin led the BTC market cap to surpass Berkshire Hathaway on Dec. 5, and it has remained the 10th-biggest asset by that measure. Despite BTCs strength, the United States Securities and Exchange Commission (SEC) has refused to approve a spot Bitcoin ETF despite numerous applicants, including BlackRock, Fidelity, ARK Invest and 21Shares, with new players seemingly entering weekly.
On Dec. 5, BlackRock reported receiving $100,000 in seed funding for its spot Bitcoin ETF. BlackRock has followed up on their application, filling an update on Dec. 12 after meeting with regulators. In the update, BlackRock contends the new ETF model offers superior resistance to market manipulation. While this is BlackRocks first update, VanEck filled a fifth spot Bitcoin ETF update on Dec. 9.
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According to reports, an approval may generate $600 billion in new demand. CryptoQuant analysts believe that an ETF approval will lead to a $1 trillion increase in Bitcoins market capitalization.
Galaxy Digital predicts a 74% price increase in the first year after a spot BTC ETF launch. The next window for the SEC to potentially approve a spot Bitcoin ETF is Jan. 5 through Jan. 10.
While some investors may be awaiting increased liquidity from a spot ETF approval, institutional investors have already begun deploying funds to Bitcoin and crypto. According to CoinShares, institutional investors have pushed $1.88 billion into crypto in the past year. This marks the 11th consecutive week of institutional inflows.
Related: BRC-20 tokens are presenting new opportunities for Bitcoin buyers
Of the $1.88 billion pushed to crypto assets last year, over $1.7 billion has flowed to Bitcoin specifically. In the past week, $39.9 million of institutional inflow was for Bitcoin alone.
According to Bob Ras, the co-creator of Sologenic,
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.
Originally posted here:
Why is Bitcoin price up today? - Cointelegraph
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