In the early US hours of Monday, Bitcoin witnessed a significant increase, with its price rising above $72,000. The surge, marked by a rise of more than 4.5% in just five hours from below $69,500 to an intra-day high of $72,579, can be attributed to a confluence of factors that have roiled the crypto market.
#1 Strong Bitcoin spot demand
The rally appears to be fueled by robust demand in the Bitcoin spot market, hinting at the potential sustainability of the move. Crypto analyst Daan Crypto Trades (@DaanCrypto) noted the healthy market dynamics, saying on X: “Funding rates still look solid. Healthy reset, price slowly rising. That’s what we want and how we want to preserve it. If longs start monkeying again as the spot bid stops, it will eventually end in a new flush. All good for now.”
In combination with rising spot prices, facts from Coinglass reveals that $40.7 million worth of BTC shorts were liquidated today, further pushing the price higher.
#2 BTC halving
The threat of Bitcoin’s next halving, which will take place about twelve days from now on April 20, has also likely played a crucial role. Historically, Bitcoin has experienced a price pullback before the halving, followed by a significant rally leading up to the event.
The halving will reduce the Bitcoin reward from approximately 900 coins per day to 450 coins. Skybridge Capital’s Anthony Scaramucci recently shared his insights with CNBC, highlighting the unpriced nature of the upcoming halving and its potential to further boost Bitcoin’s price.
“They now say that the halving has been priced in. I do not believe that. I think Bitcoin has a lot more to offer here,” he said. At current prices, it would take approximately $65 million in Bitcoin ETF inflows per day to buy up the daily mined supply. In 2.5 weeks that will be just $32.5 million.
#3 BTC follows gold
The correlation between Bitcoin and gold, both considered safe havens, is another factor contributing to Bitcoin’s price movement. Gold’s strong opening this week, with a new all-time high of $2,253, is mirrored by Bitcoin’s price trajectory. Gold enthusiast Peter Schiff and crypto analyst Michaël van de Poppe have both commented on the positive correlation between the two assets, indicating shared momentum amid economic uncertainties.
Goldbug Peter Schiff commented via X: “It was a volatile Sunday evening for gold. After an early sell-off at $27, the price rose above $45 to hit a new all-time high above $2,348. This is an early stage of a major repricing of gold to reflect much higher future inflation. It is a warning that monetary policy is too loose.”
Crypto analyst Michaël van de Poppe noticed: “Here we go. Gold opens with a big new upside candle and Bitcoin is back to $71,000. Given the strength of commodities and Bitcoin’s current price action, I suspect we’ll see a test of all-time highs.”
#4 Strong weekly close
The importance of Bitcoin’s weekly candle close was highlighted by CRG, a renowned analyst, who pointed out that it contributed to the rally. Bitcoin price’s ability to sustainably close above the 2021 high for the second week in a row indicates strong bullish sentiment in the market.
Great end of the week
New all-time highs this week
Source: my plums pic.twitter.com/wyxwomdDjZ
— CRG (@MacroCRG) April 8, 2024
#5 Hong Kong is ready to launch Spot ETF
Finally, the prospect of spot Bitcoin ETFs launching in Hong Kong may have created optimism in the market. Reports indicate that major Chinese asset managers such as Harvest Fund and Southern Fund, which manage assets worth more than $230 billion and $280 billion respectively, are positioning themselves through subsidiaries in Hong Kong to enter the Bitcoin ETF market, pending approval by the regulatory authorities.
#6 Extra: The “Ethena Effect”
Ethena Labs has started buying BTC as part of a cash-and-carry trade to create a “safer” USDe synthetic dollar product for users. This move is being critically observed by the crypto community.
Ethena now owns over half a billion in BTC, backed by Binance, OKX and Deribit
Ready for the halving ₿ pic.twitter.com/auquK59DfY
— Seraphim (@MacroMate8) April 8, 2024
At the time of writing, BTC was trading at $72,103.
Featured image created with DALL·E, chart from TradingView.com
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