In a notable surge, Bitcoin, the world’s largest cryptocurrency, attained its highest price of 2023, reaching $37,200 in early trading. This marks a 4.4% increase in a 24-hour period, propelling Bitcoin to an impressive 18-month high. The cryptocurrency has demonstrated remarkable growth, accumulating a 122% increase in value throughout the current year and a substantial 134% surge over the past 12 months.
SEC Talks Propel the Rally
The recent rally is attributed to the prolonged discussions between the Securities and Exchange Commission (SEC) and financial firms concerning the potential approval of spot Bitcoin exchange-traded funds (ETFs). Reports surfaced on Wednesday indicating renewed talks between the SEC and Grayscale, a digital asset company that recently secured a legal victory against the SEC in its pursuit to transform the Grayscale Bitcoin Trust into an ETF.
Anticipation for Spot ETF Approval
Bloomberg Intelligence strategists foresee a 90% chance of approval for a spot ETF in the United States by January. The excitement surrounding a spot ETF has been building throughout the year, with major players in fund management, including BlackRock, awaiting SEC approval. The prospect of an approved spot ETF has become a focal point for market participants.
CoinDesk reported a noteworthy event during early Asian trading hours where short-sellers liquidated nearly $50 million in Bitcoin positions. This “short squeeze” contributed to the momentum of the day’s rally. The dynamics of short positions being closed added fuel to Bitcoin’s upward trajectory.
Supply Constraints and Long-Term Investor Confidence
A contributing factor to Bitcoin’s price surge is the limited supply of the cryptocurrency in the market. According to Glassnode, the circulating supply of Bitcoin is exceptionally low, with long-term investors holding onto their holdings in anticipation of further price increases. The data suggests that the amount of held Bitcoin in wallets with minimal spending history recently hit a record high, surpassing 15.4 million.
Looking ahead, the cryptocurrency community is eyeing the anticipated “halving” event in mid-2024. This event, where the number of bitcoins rewarded to miners is halved, has historically been associated with new all-time highs within 12 months. Industry veterans suggest that this upcoming “halving” could play a role in pushing Bitcoin’s price beyond $100,000.
In summary, Bitcoin’s surge to $37,200 is influenced by a convergence of factors, including ongoing SEC discussions, heightened anticipation of spot ETF approval, a significant short squeeze, and the unique dynamics of Bitcoin’s supply. As the cryptocurrency landscape continues to evolve, market participants are closely monitoring these developments and their potential implications for the future of Bitcoin’s value.
