How Bitcoin ETFs can slingshot BTC to $45K
- Bitcoin inspired hope in the market as it crossed the $40k mark.
- Trader activity reached new highs.
Optimism around Bitcoin [BTC] has been at an all-time high as BTC crossed $40,000. The surge in BTC’s price has caused institutional investors to get even more eager in their pursuit of BTC’s ETF.
Its ETF season
According to Bloomberg analyst James Seyffart, BlackRock has resubmitted a modified document for a Bitcoin spot ETF (ETFS-1) to the US SEC.
The SEC has reportedly given similar instructions to multiple issuers, including Bitwise, which previously submitted a second revised S-1 document.
This indicates concerted efforts between the SEC and these issuers to address and resolve outstanding issues.
The increased accessibility might drive more people to invest in Bitcoin. It could potentially impact its demand and value positively as well.
UPDATE: They're just pouring in. We have another spot #Bitcoin ETF S-1 (prospectus) amendment tonight. This one is from @BlackRock. SEC is obviously giving multiple issuers the same or very similar instructions. pic.twitter.com/nk1yImZpXk
— James Seyffart (@JSeyff) December 4, 2023
Coupled with that, Open Interest in BTC was also rising.
Traders go all in
Open interest in bitcoin perpetual futures on Deribit has hit a yearly peak at $740 million, a level last observed in November 2021 during bitcoin’s all-time high above $68,000. Additionally, CME’s bitcoin long open interest has reached an all-time high of $2.2 billion.
The surge in open interest for bitcoin futures on Deribit and CME can significantly impact Bitcoin.
When more people show interest in trading these futures, it suggests a growing demand for Bitcoin. This heightened interest often leads to increased trading activity, potentially influencing the cryptocurrency’s price.
With Deribit’s open interest hitting a yearly high and CME’s bitcoin long open interest reaching an all-time high, it indicates a strong positive sentiment and confidence among investors.
More trading and higher demand could contribute to upward price movements for Bitcoin, as seen historically during peaks in open interest.
BTC looking like a hedge
Another factor that could make people hopeful about BTC would be it losing its co-relation with S&P 500.
When Bitcoin and the S&P 500 move independently, it means Bitcoin’s value isn’t solely tied to traditional stock market trends. This independence is crucial because it indicates that Bitcoin is evolving into a mature asset class.
Investors often seek assets that don’t necessarily mirror traditional markets. Bitcoin’s detachment from the S&P 500 suggests it’s gaining its own identity as a store of value and a hedge against fiat.
#Bitcoin entered a negative correlation with the S&P 500. It's not a tech stock anymore. It's the digital gold.
— Ki Young Ju (@ki_young_ju) December 4, 2023
Is $45k on the way?
Due to this surge in hope amongst holders, many expect BTC could reach $45,000.
The $45k mark holds immense significance for Bitcoin’s medium-term investors. As Bitcoin recently climbed from $35k to around $42k, attention is shifting to the next resistance level, which is $45k.
This level is crucial not just technically but also for a substantial group of Bitcoin holders who acquired their holdings 2 to 3 years ago. Representing 16% of the active supply, this cohort of medium-term investors has a significant influence on market dynamics.
Their decisions, particularly as the price nears or surpasses their $45k break-even point, could bring about notable shifts in market sentiment.
Monitoring their activity on exchanges provides valuable insights into potential market movements around this pivotal price level, shaping Bitcoin’s trajectory in the medium term.
The $45k Threshold: A Turning Point for Bitcoin's Medium-Term Investors
"The $45k mark is pivotal as it represents the cost basis for investors who acquired Bitcoin 2 to 3 years ago. This cohort holds 16% of Supply and represents 33% of Realized Cap."
Quicktake Post by Gustavo… pic.twitter.com/xo4rAoeo92
— CryptoQuant.com (@cryptoquant_com) December 5, 2023
Read Bitcoin’s [BTC] Price Prediction 2023-2024
At press time BTC was trading at $41,520.55 and its price had grown by 0.05% in the last 24 hours.
The volume at which it was being traded had surged during this period as well. Only time will tell whether the bullish hypothesis for BTC comes to life going forward.