Bitcoin Surges Amid Growing Optimism and Favorable Market Conditions
Summary:
Bitcoin has seen a significant surge in value, with an 8.5% increase reaching $71,926 on May 21. Its increasing value has been driven by growing optimism about a U.S.-approved spot Ethereum exchange-traded fund (ETF) and a general market trend seeking inflation protection. Key dynamics, including potential competition from Ethereum and a shift in regulatory attitudes, are likely to impact cryptocurrency investment in the future. Data suggests a path of strategic leverage for Bitcoin buyers, offering an optimistic outlook for future gains in BTC prices. Reports from crypto analysts further hint at the potential of Bitcoin reaching new all-time highs.
Bitcoin has seen a fast-paced surge, increasing in value by 8.5% in a 24-hour window to achieve $71,926 on May 21. This places Bitcoin just short of 2.5% from its ultimate peak value. BTC derivatives also appear to be paving the way for new all-time highs in the near future. The daily increase in the BTC price of 4% is apparently driven by rising hope over the chances of U.S. approval of a spot Ethereum exchange-traded fund (ETF), coupled with a general market trend leaning toward inflation protection. This trend has also pushed up gold and the S&P 500 to new record peaks on May 20.
The trading community is curious about whether Bitcoin's recent price boom was fueled by a high level of leveraged long positions and what a spot Ether (ETH) ETF could mean.
An attitudinal shift in regulators was observed following a reversal by the U.S. Senate. Senior Bloomberg ETF analyst, Eric Balchunas, increased the odds of the Ethereum spot ETF getting approved from 25% to 75% on May 20, under the sway of political pressure. This came after a crucial May 16 decision by the U.S. Senate that overruled SEC’s Bulletin 121 aiming at enforcing strict capital requirements on banks dealing with digital assets.
President Biden had previously suggested the use of executive power to veto any resolution revoking the SEC’s policy. But the Senate's decision in favor of cryptocurrency adoption led the White House to reconsider its strategy, according to Perianne Boring, the CEO and founder of the Blockchain Trade Association Digital Chamber.
Previously Gary Gensler, SEC’s chair, had been unfavourably disposed towards Ethereum, hesitating to classify it as a non-security or indicating any likelihood of approving its spot ETF. But on May 20 the SEC reportedly called for updates to the spot Ethereum ETF filings from exchanges such as NYSE and Nasdaq, indicating a significant change.
Despite potential rivalry from Ethereum, the launch of its spot ETF is likely to prove beneficial for the overall cryptocurrency sector. The dwindling negative regulatory stance toward crypto in the U.S. could urge more investment managers, pension funds included, to change their views and be more open to investing in the sector. Historically, regulatory uncertainties targeted at mining operations or privacy-centered intermediaries have negatively influenced Bitcoin’s price.
Bitcoin derivatives are showing moderate bullishness. An increase in demand for BTC long positions through monthly futures was observed following the price increase of Bitcoin on May 21. Generally, these derivatives carry a premium of 5% to 10% over the spot price owing to their longer settlement periods.
Data shows the current BTC futures premium rose to 14%, the highest in five weeks, indicating a moderate bullish sentiment. This is a clear contrast against what happened on April 1, when the futures premium hit 25%, generally signaling excessive market optimism.
Understanding the dynamics at play can be achieved by examining the options market as well. The 25% delta skew assists in evaluating how leveraged influence recent price trends are. A market enthusiastic about price hikes typically sees a -7% skew, as put (sell) options become less expensive.
The current -8% skew in Bitcoin's options markets reflects a healthy market sentiment. It's noteworthy because the BTC price has risen by 23% in 19 days whilst the options market has remained relatively stable.
The Bitcoin derivatives market data suggests there is still room for strategic leverage among Bitcoin buyers without the fear of overoptimism, which could trigger major liquidations during unexpected price drops. This paints an encouraging picture of Bitcoin price’s potential for further increase in the coming weeks, with the possibility of setting new records above $74,000, according to data from Game of Trades.
Noted crypto analyst Game of Trades believes that the bullish momentum could push Bitcoin up to $80,000 based on "key moving averages" and "channel support."
This news should be considered only as general information and not be construed as legal or investment advice. The views and opinions conveyed here are unique to the author and do not necessarily represent those of Cointelegraph.
Published At
5/21/2024 7:42:45 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.