Bitcoin Value Surges Following Binance Settlement; Potential ETF Approval Raises Market Morale
Summary:
Bitcoin's value has surged, after bouncing back from a November 21 drop, largely due to Binance's $4.3 billion settlement with the DOJ which boosted market sentiment. Many traders believe this increase suggests imminent approval of a traditional Bitcoin ETF which could generate $600 billion in new demand and increase Bitcoin's market capitalization by $1 trillion. Meanwhile, institutional investments in cryptocurrencies, especially Bitcoin, have risen significantly.
Bitcoin's value has seen an increase today, bouncing back from a November 21 drop to $35,651 and reaching a day's peak of $37,431. This surge follows a 3% bounce for Bitcoin as traders responded to Binance's deal with the U.S. Department of Justice (DOJ). The settlement has rekindled trader's confidence that a traditional Bitcoin exchange-traded fund (ETF) could be approved shortly, leading to a significant influx into Bitcoin and driving values upwards across the cryptocurrency market.
Let's delve into the causes for today’s Bitcoin increase. An end to the stories surrounding Binance has been reached with a settlement. Initially, there were various reactions to Binance’s $4.3 billion deal with the DOJ and Changpeng “CZ” Zhao’s guilty plea. However, after digesting the event, it was observed that Binance was not experiencing a massive exit of funds in the same way that FTX did during its liquidity turmoil.
Despite the agreement with the DOJ, Binance's Bitcoin reserves have only dropped 17% from their highest ever point. In contrast, FTX's Bitcoin reserves had dipped by 99.9% from their peak when the platform faced a bank run in November 2022. While Binance's Bitcoin reserves are at their lowest since 2017, they still hold the most significant volume of BTC among centralized exchanges.
The potential approval of a traditional Bitcoin ETF is raising market morale. Despite a handful of macroeconomic obstacles, Bitcoin's value continues to rise, marking a 124% gain since the beginning of the year, accompanied by growing volatility. Some Bitcoin analysts are optimistic about the approval of a traditional Bitcoin ETF following the Binance and DOJ deal, drawing parallels to a comparable agreement secured by Arthur Hayes and BitMex. The Bitcoin Fear and Greed index remains in the "Greed" sector, reflecting a sustained high level of market sentiment compared to the previous month.
After a flood of amendments to traditional Bitcoin ETF in mid-October, the Securities and Exchange Commission (SEC) has consistently rejected a traditional Bitcoin ETF application despite several submissions, including ones from BlackRock, Fidelity, ARK Invest, and 21Shares. The SEC's next deadline is January 10, following delays on a November 17 deadline. Both Grayscale and BlackRock executives met with the SEC on November 20 to discuss the approval of a traditional Bitcoin ETF.
According to estimations, approval could generate $600 billion in new demand. Analysts at CryptoQuant believe that an ETF approval could result in a $1 trillion increase in Bitcoin's market capitalization. Galaxy Digital forecasts a 74% price increase in the first year following the launch of a traditional BTC ETF.
Lastly, while some investors may be waiting on heightened liquidity from approved ETFs, institutional investors have already started investing in Bitcoin and other cryptocurrencies. Per CoinShares, in the past year, institutional investors have invested over $1 billion in digital assets. Of that billion, more than $240 million has been put into Bitcoin specifically, with a notable $155 million invested just in the past week.
Published At
11/22/2023 9:55:13 PM
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