Bitcoin’s (BTC) price continues to benefit from the hype surrounding the potential approval of the first spot BTC exchange-traded fund (ETF) as the top crypto has, for the most part, traded above $46,400 for the past 24 hours, its highest level in nearly two years.
Data provided by TradingView shows that bears made an attempt to push its price lower in the early hours on Tuesday, but bulls were prepared to hold their ground, resulting in a whipsaw one-hour candle that ranged from a low of $45,535 to a high of $47,075.
BTC/USD Chart by TradingView
After bears ran out of momentum, bulls steadily pushed BTC price higher, and it trades at $46,640 at the time of writing, a gain of 1.5% on the 24-hour chart.
“Yesterday, Bitcoin experienced a robust rally, surpassing the $47,000 mark and reflecting a 6.9% surge in price compared to the previous day,” said Matteo Greco, research analyst at Fineqia International, in a note shared with Kitco Crypto. “This upward momentum follows a positive trend observed in the first week of the year, that resulted in a 3.9% increase from the closing value of the preceding week.”
“The market's tumultuous nature is predominantly attributed to the imminent SEC decision on the approval or rejection of BTC Spot ETFs,” he said. “The SEC will communicate its decision to 21Shares by January 10, and likely notify most, if not all the 12 other issuer applicants on the same day of approval. This approach aims to prevent 21Shares from having a first-mover advantage over other issuers.”
Greco noted that the rise in volatility correlates with an increase in trading volumes on centralized exchanges, highlighting that the “Cumulative volume on centralized exchanges reached approximately $1.1 trillion in December 2023, marking the highest level since May 2022.”
“The trend of heightened volume persisted into the first week of 2024, with daily volumes reaching $42.7 billion to Jan. 7, the highest weekly level since March 2023,” he said.
“The connection between elevated volumes and the impending decision on BTC Spot ETFs is apparent when examining the daily spot volume on centralized exchanges using a weekly moving average,” he said. “In the period between January 1 and 7, 2024, BTC recorded $14.1 billion in daily volume, reflecting a 61% increase from the $8.75 billion recorded the previous week. In the same period, Ethereum (ETH)'s total daily volume amounted to $4.2 billion, marking a 3% decrease from the $4.4 billion recorded in the preceding week.”
Greco also pointed to the increase in Bitcoin dominance as a sign of its increasing strength. “BTC’s share was 54% at the end of the week, a 5.8% increase from 51% registered the previous week. These data points indicate a shift of capital from altcoins to BTC, aligning with positive sentiment by market participants toward an approval of BTC Spot ETFs,” he said.
“The anticipation of ETF approvals is also evident in the Grayscale Bitcoin Trust (GBTC) discount, which narrowed to 5.6%, its lowest level since June 2021,” he added. “This data underscores investors' perception of SEC approvals to be quite likely, including a go-ahead for Grayscale to convert its BTC trust into a BTC ETF, thereby reducing the discount to zero.”
The expectations that an approval is imminent increased on Tuesday, as representatives from both Valkyrie and VanEck made statements that suggest an approval will come on Wednesday and the first spot BTC ETFs will begin trading on Thursday.
While crypto traders are excited about the launch of the first spot BTC ETF and the potential inflows from institutional investors that could follow, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, warned that the launch could mark the top of the Bitcoin market in the near term.
“There’s almost always one simple prerequisite for things to break. Why did Lehman break? Why did FTX break? Risk assets have to go down. That’s what’s missing. And Bitcoin is one of the riskiest assets,” McGlone said during an interview with Scott Melker. “We’ve had the hopium. We’ve rallied 50% from $30,000. We’ve rallied 3x from last year… I look at it like, Okay, great. Thank you. You don’t want to be getting overweight here. You want to be saying thank you.”
Jim Cramer, host of CNBC’s Mad Money, also warned that Bitcoin’s price is topping out, which elicited calls to buy more from crypto investors, who prefer to use the inverse of Cramer’s recommendations to determine their next move in the market.
BREAKING NEWS ?
Jim Cramer says #btc has topped out at $47k.
We all know what that means.
Lets see if the inverse Cramer effect is spot on again ? pic.twitter.com/wtzwyyedVf— Crypto With Leo (@CryptoWithLeo) January 9, 2024
