Bitcoin (BTC) surged past $43,000 on Tuesday, which is a 160% increase year-to-date, driven by its reputation as a store of value and growing institutional interest, particularly in anticipation of a U.S. Spot Bitcoin ETF approval. However, analysts warn that global economic trends, like inflation and central bank policies, could still impact the price of the market leader. BTC faced resistance at $44,500 and may see a correction if traders take profits, potentially retracing to $40,900. Meanwhile, short-term BTC holders have moved around $5 billion worth of BTC to exchanges, suggesting they may, in fact, be preparing to sell. With regards to ETFs, BlackRock has received $100,000 in seed capital for its proposed Bitcoin ETF.
BTC is Trading Above $43K!
Bitcoin surged past the $43,000 mark on a Tuesday afternoon, extending a rally that many cryptocurrency analysts believe is just the beginning of a larger upward trend. Year-to-date, Bitcoin has witnessed a remarkable increase of over 160%. The nearly 4% price increase in the price of BTC over the past day made it possible for the market leader to reach highs not seen since April 2022.
Hal Press, the founder and CEO of North Rock Digital, commented on BTC’s latest success, stating that demand has been primarily driven by Bitcoin's consistent price performance as a “store of value” and the increasing regulatory clarity, partly due to the expected approval of a US Spot Bitcoin ETF. Analysts at altFINS, a crypto analytics and trading platform, concurred that the optimism surrounding the approval of ETFs and the growing institutional adoption of Bitcoin are the main factors fueling this rally.
However, they cautioned that global macroeconomic trends should not be ignored. Although the global inflationary surge is quickly easing, with the Eurozone leading the way, it would, however, be premature to assume that central banks have definitively won the battle against high inflation and are now ready to ease their monetary policies.
All eyes are now on the Federal Reserve, which is set to announce its next interest rate decision in the coming week. According to data from CME Group, traders seem to be confident in the fact that the central bank will choose to maintain interest rates at their current levels.
BTC Price Overview
BTC was met with some resistance at the $44,500 mark during yesterday’s trading session, causing it to correct slightly. Should traders continue to take profit in the coming 24-48 hours, the market leader is at risk of retracing down to the next key support level at $40,900.
Continued sell pressure could then force BTC down to as low as $38,700. On the other hand, BTC entering into another leg up will most likely result in it flipping the $44,500 resistance level into support. This will then clear a path for the cryptocurrency to climb to as high as $48,000 through the course of the following week.
Daily chart for BTC/USDT (Source: TradingView)
Technical indicators on BTC’s daily chart suggested that there has been a drop in buying power. More specifically, both the daily Moving Average Convergence Divergence (MACD) and the daily Relative Strength Index (RSI) indicators hinted at a potential price correction in the coming couple of days.
Although the MACD line was positioned above the MACD Signal line, suggesting a continuation of the bullish trend, momentum seems to have cooled down a bit. In addition to this, the RSI line was falling towards the RSI Simple Moving Average (SMA) line. This may be indicative of bulls temporarily exiting BTC’s charts.
Bitcoin Short-Term Holder Sales Approach $5 Billion
HODLers are celebrating as the price of BTC is reaching 19-month highs. While seasoned investors continue to hold onto their BTC positions, a completely different story is unfolding among short-term holders (STHs) who have been cashing in on their investments.
STHs are people or entities that have held their portion of the BTC supply for 155 days or less. This group is usually associated with more speculative investors, and their actions have played a crucial role in supporting BTC prices in 2023.
According to experts like James Van Straten, a significant amount of Bitcoin has been transferred between STHs and cryptocurrency exchanges over the course of just four days leading up to Dec. 4. This transfer activity has approached a staggering $5 billion, indicating that short-term holders have actively been preparing their coins for sale. BTC’s staggering performance over the past few weeks has ignited the most considerable profit realization from short-term holders since November of 2021, according to Van Straten.
Latest Bitcoin ETF News
BlackRock revealed that it received $100,000 in "seed capital" for its planned Bitcoin ETF , according to a recent application submitted to the U.S. Securities and Exchange Commission (SEC). In the filing, it was stated that the seed capital investor agreed to buy $100,000 worth of shares on Oct. 27, 2023, and on the same day, they received 4,000 shares at a per-share price of $25.00, known as the "seed shares." Seed capital is the initial funding required to enable an ETF to create units that form the basis for shares to be offered and traded in the open market.
BlackRock's proposed ETF, named the "iShares Bitcoin Trust," will primarily invest in BTC itself rather than Bitcoin futures, distinguishing it from other ETFs tied to the cryptocurrency. This proposal is one of 13 applications currently awaiting regulatory approval. The SEC is widely anticipated to approve one or more Spot ETFs in the early months of the new year. Some analysts estimate that there is a 90% probability of approval in January.
