Bitcoin price rose to a two-month high of $29,450 today, reflecting a 3.3% increase in the past 24 hours. While several factors could have contributed to this rally, four key drivers appear to dominate the discussions.
#1 Expectations of a spot Bitcoin ETF approval
There is palpable excitement within the community as rumors mount that the US Securities and Exchange Commission (SEC) may approve the first-ever Bitcoin ETFs. Currently, the SEC is actively working with prominent filers including Grayscale, BlackRock, Fidelity, Invesco, and Ark Invest, among others. This has never happened before in the long history of Spot Bitcoin ETF rejections. It appears the market is starting to cautiously price in the adoption of a spot ETF, also known as a front-run.
Yesterday, BlackRock filed its updated ETF filing, adding even more fuel to the fire. As James Seyffart, a Bloomberg ETF expert, clarified“BlackRock filed an updated Bitcoin ETF prospectus early this morning, which is likely their response to SEC comments, as we’ve seen from Ark, Fidelity and others. Even more confirmation that issuers are in discussions with the SEC.”
The forecasts surrounding this potential approval are overwhelmingly bullish. Macro analyst Alex Kruger predicts a price increase of more than 20% on the day of approval, with trader Christopher Inks setting his sights between $38,000 and $40,000.
A recent CryptoQuant report states that Bitcoin spot ETFs could increase market cap by as much as $1 trillion, stating: “If $150 billion of fresh capital enters the Bitcoin market, it would increase BTC’s market cap by $450 billion to $900 billion.” Meanwhile, Matrixport’s research predicts a Bitcoin price range between $42,000 and $56,000 following SEC approval of Blackrock’s ETF.
#2 Jerome Powell’s latest speech
In recent comments that have undoubtedly affected the crypto markets, Federal Reserve Chairman Jerome Powell pointed out the possibility that the central bank could suspend its historic series of rate hikes as long as there is steady progress on inflation and rate hikes may be suspended. Powell emphasized the importance of the 2% inflation target and discussed the balance between avoiding a potential recession and keeping inflation under control.
While raising rates too high risks a major recession, not raising rates high enough risks another outbreak of inflation. According to current market forecasts, the Fed will therefore not raise rates at the next FOMC meeting from October 31 to November 1 and will continue to monitor inflation data. This stance from the Fed likely provided a bullish push for Bitcoin and the larger crypto market.
#3 Bitcoin’s correlation with gold
Yesterday the gold price rose again by 1.3%, and since October 6 even by as much as 10%. As NewsBTC reported yesterday, the gold price could be a leading indicator for the gold price. When gold rises, Bitcoin follows as a hedge against the chaos in the US Treasury market and global crises and wars.
Accordingly, Charles Edwards, founder of Capriole Investments, noticed via
Combined with geopolitical tensions and war, the need for QE is increasing rapidly in the future. This makes insurance assets (Gold, Bitcoin) absolutely rip in unison. When both assets move together in this way, it is often the start of something very big.”
#4 Shorts are liquidated
According to facts of Coinglass, approximately $21 million worth of Bitcoin shorts were liquidated during the recent surge. The futures market has therefore played a role in this price movement.
Renowned crypto trader CrypNuevo declared via He also warned: “The current ratio of long-short open positions is very high (+4 times more longs than shorts).”
At the time of writing, BTC saw a slight retracement and traded at $29,233.
Featured image from Nairametrics, chart from TradingView.com