Bitcoin Bounces Back: Anticipated ETF Approval Fuels Price Surge and Institutional Inflows
Summary:
Bitcoin's price has rebounded high today after a dip on Nov. 14, attributed to the significant influx brought about by the anticipated approval of a spot BTC exchange-traded fund (ETF). The SEC currently has until Nov. 17 to approve 12 pending spot Bitcoin ETFs, a move that could generate $600 billion in new demand. Despite macroeconomic challenges, Bitcoin's price continues to rise with a 126% year-to-date gain. Meanwhile, institutional investors are already pumping significant amounts into Bitcoin, thereby reducing the available BTC supply.
Today, the price of Bitcoin (BTC) is on the rise, recovering from a Nov. 14 dip that took it down to $34,500 and soaring to a daily peak of $37,650. This rebound comes after the Bitcoin price hit a one-week nadir on Nov. 15. There's considerable excitement about a spot BTC exchange-traded fund (ETF), which seems to be a catalyst for increased Bitcoin inflows as the available supply reduces, consequently causing a surge in crypto market prices.
Why is Bitcoin's price increasing today? One decisive factor is the market sentiment boosted by the anticipated approval of the spot BTC ETF. Despite various macroeconomic challenges, Bitcoin's price is persistently advancing, with a impressive 126% gain this year so far. Traders in the options market seem to be setting their sights on the $40,000 mark. The past fortnight has seen the Crypto Fear and Greed index firmly in the "Greed" segment, indicating an uplift in market sentiment.
Mid-October marked a flood of spot Bitcoin ETF amendments, with the first opportunity for the Securities and Exchange Commission (SEC) to approve 12 pending ETFs arising on Nov. 9. Until now, the SEC has consistently declined to authorize a spot Bitcoin ETF, despite several applications from such organizations as BlackRock, Fidelity, ARK Invest, and 21Shares. The approval window extends till Nov. 17. If the SEC keeps stalling on the spot Bitcoin ETF approval, the window remains open until Jan. 10.
Reports suggest that approval could create a $600 billion new demand. CryptoQuant analysts project that an ETF approval could result in a $1 trillion boost to Bitcoin's market value. Galaxy Digital anticipates a 74% hike in price during the first year post a spot BTC ETF launch.
While some investors may be awaiting improved liquidity from sanctioned ETFs, institutional investors have already begun pouring funds into Bitcoin and other cryptocurrencies. According to CoinShares, institutional investors have directed more than $1 billion into crypto in the past year. Out of this sum, over $240 million has been specifically pushed towards Bitcoin. Institutional investors constitute 19.8% of all Bitcoin trading volume.
As institutional funds keep flooding into Bitcoin, the available BTC is dwindling. The provision of Bitcoin on exchanges lags behind the peak reached on May 3, 2023. Exchanges have lost over 200,000 Bitcoin since this peak, maintaining a downward trend spanning several years in BTC balances.
When traders withdraw their BTC from exchanges, typically to hold it in self-custody for the long duration, the market regards it as a bullish sign. On Nov. 7, long-term Bitcoin holders set a record by buying 92% of all newly minted BTC.
Analysts at Glassnode reckon that the combination of exchange supply and short-term holder supply could mean that the available Bitcoin supply is at a historical low relative to the market. The analysis suggests, "The combined 'available supply' from Short-Term Holder Supply and Exchange Balances, equivalent to around 2.3M BTC, constitutes 23.8% of the circulating supply - currently at an all-time low."
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Published At
11/15/2023 8:43:53 PM
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