The world’s largest cryptocurrency, Bitcoin (BTC), has seen a significant price increase today, reaching $28,004. While several factors contributed to this jump, here are the main reasons:
No. 1 SEC’s Non-Objection to Grayscale Spot Bitcoin ETF
Late Friday evening, the market became aware of the U.S. Securities and Exchange Commission’s decision not to appeal the ruling favoring Grayscale’s conversion of the Grayscale Bitcoin Trust (GBTC) into a spot ETF. This decision may not have been fully priced in on Friday, as Bitcoin’s price rose just 1.2% on Friday (followed by a rapid retracement), in stark contrast to the 8% spike on August 29 when the original ruling was announced.
This move signals the SEC’s potential willingness to greenlight a Bitcoin ETF in the coming weeks. As a Grayscale spokesperson orphan from: “The Federal Rules of Appellate Procedure’s 45-day period to request rehearing has now expired. The Grayscale team remains operationally ready to convert GBTC into an ETF upon SEC approval.”
Bloomberg Intelligence’s James Seyffart highlights likely talks between Grayscale and the SEC in the near future, to report, “Dialogue between Grayscale and SEC should begin next week. I hope to get more information about the next steps sometime next week or the week after?
As for the arrival of a Spot ETF, analysts at Bloomberg Intelligence predict a whopping 90% chance that the SEC will receive approval around January 10.
#2 The correlation of BTC with gold
Renowned analyst MacroScope recently as long as deep insights into the complex relationship between gold and Bitcoin, which may have contributed to the current price movement. Gold rose more than 6.5% from October 6 through Friday last week, driven by a combination of elements such as central bank policies, US fiscal challenges and unfolding geopolitical events such as the Israel-Hamas war .
Remarkably, the gold market has witnessed an observable pattern: smart investors, often labeled as the ‘smart money’, have strategically capitalized on price declines to increase their long positions. This behavior was especially pronounced around the $1820-1860 price levels, indicating a fundamental shift in gold’s price trajectory.
Related Reading: Analyst Predicts Next Bitcoin Cycle Top – Is It $89,000 or $135,000?
These evolving dynamics in the gold market have significant implications for Bitcoin. Historically, gold has often pioneered a trend, with Bitcoin lagging behind to match it. This lead-lag relationship, as highlighted by MacroScope, could have been critical in predicting Bitcoin’s move today. As gold appears to be charting a bullish course, Bitcoin, while influenced by its various catalysts such as the adoption of spot ETFs, could be poised to mirror gold’s trajectory.
#3 Short squeeze
Finally, on a more technical note, there has been significant activity in the BTC futures market that has played a role in the rising price. So far today, approximately $20 million worth of shorts have been liquidated, the most since October 1, when $37.5 million worth of shorts were liquidated and BTC rose 4% from $27,000 to almost $28,100 in a very short time.
In conclusion, Bitcoin’s impressive rise to $28,000 can be attributed to a combination of regulatory developments, its correlation with gold, the increasing influence of large holders or ‘whales’, and significant activity in the futures market.
At the time of writing, BTC was trading at $27,880.
Featured image from iStock, chart from TradingView.com