The price of Bitcoin (^BTCUSD) is up more than +3% today at a 21-month high as anticipation intensifies for SEC approval of an exchange-traded fund (ETF) that invests directly in Bitcoin. Bitcoin has rallied more than +20% in the past month as the January 10 deadline draws closer for the U.S. Securities and Exchange Commission (SEC) to approve a spot Bitcoin.
Optimism that the SEC will finally approve a Bitcoin ETF has sparked the buying of cryptocurrencies for fear of missing out on the current rally. Alpha Impact said investors have started “buying on January 1, first thing New Year’s morning,” in anticipation of SEC approval. Also, blockchain advisor Venn Link Partners said a major correction is unlikely, and “I think traders would need nerves of steel to short Bitcoin” now, given the broader bullish sentiment.
Another supportive factor for Bitcoin is the upcoming halving of Bitcoin, which is a process that cuts in half the Bitcoin reward that miners receive per block. The halving is planned for April and happens every four years or so. Bitcoin has climbed to record highs after each of the last three halvings. According to Bitcoin’s founding protocol, just 21 million Bitcoins will ever be in circulation, an appealing trait of cryptocurrencies based on scarcity.
Bitcoin rallied nearly +160% last year, partially recovering from the -643% plunge in 2022. Bitcoin prices have trended higher since posting a 3-year low in November 2022 after a series of scandals and regulatory actions triggered a market slide. The price of Bitcoin is still more than -33% below its all-time high of $69,000 in 2021. Trading volumes in spot Bitcoin and its derivatives have soared since asset managers like BlackRock filed their applications for spot Bitcoin ETFs. According to data from The Block, trading volume for Bitcoin options reached an all-time high last Friday.
Bitcoin still has many detractors who argue that cryptocurrencies are fundamentally worthless and a haven for criminals. In November, Binance, the largest cryptocurrency exchange, agreed to pay a $4.3 billion fine for several violations. Investors will find out by January 10 if the surge in Bitcoin prices can continue. MicroStrategy said, “The approval of the spot Bitcoin ETF is going to be a major catalyst; it’s going to definitely drive a demand shock,” as mainstream investors currently lack a “high bandwidth, compliant” investment channel for the token.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
