The price of Bitcoin (BTC) launched above $US42,000 this week and is trading above $US41,000, marking a gain of over 150% since its bottom at the start of the year.
So what’s going on? On Monday, December 4, BTC surged after $US220 million worth of short trades, which were opened by traders betting that the price would fall, were liquidated. This situation is known as a short squeeze and causes the price to shoot in the opposite direction as traders are forced to buy BTC at a higher price to cover their losing bets.
This rise is an extension of the run that began in October when news regarding BlackRock’s plans for a BTC Exchange Traded Fund (ETF) pushed the price to new highs for 2023. The recent enthusiasm was driven by the appearance of BlackRock’s proposed ETF ticker on the Depository Trust & Clearing Corporation’s (DTCC) website, which investors interpreted as a precursor for the ETF’s launch.
Bitcoin started the year with a massive 50% price run-up, pushing past $US30,000 for the first time since June 2022. However, investor confidence was shaken during the middle of the year as the US Securities and Exchange Commission (SEC) commenced a regulatory crackdown on prominent crypto exchanges, Binance and Coinbase. This caused the market to fall substantially as investors feared another FTX-like implosion.
Shortly after the regulatory crackdown— just when crypto confidence was at a low point— sentiment shifted.
In June, BlackRock, the world’s largest asset manager, filed for a Bitcoin ETF (Exchange-Traded Fund). An ETF is an investment fund and exchange-traded product with tradable shares on a stock exchange. BlackRock’s desire to create one specifically for Bitcoin is a big deal, and the market reaction confirms it, with Bitcoin pushing from below $US25,000 to almost $US31,000 in a week.
The hype of the BlackRock news died off over the following months. However, the surge in price for BTC this week shows that the optimism surrounding the ETF is still as strong as ever. It is still yet to be seen whether the ETF will be approved by the SEC, but as shown by the price action this week, investors are leaning towards a positive outcome.
Bitcoin chart by TradingView
This week’s bullish crypto sentiment has been driven by a mass liquidation event for traders betting the Bitcoin price would go down over the weekend. The run-up in price began in October and was based entirely on optimism for the BlackRock BTC ETF.
While the appearance of the ticker symbol for BlackRock’s ETF on the DTCC website is positive news, it indicates nothing about regulatory approval for the ETF application. It is more an indication of the preparation that is underway for the ETF so that it can go live quickly if it does get approved. This is prep that any ETF pending SEC approval would be subject to.
Since the beginning of October, BTC has soared almost 60%, drastically outpacing other key indices like the S&P500 and the ASX200. Many of the other top 10 cryptocurrencies have followed BTC in this price surge, with Ethereum shooting past $US2250 and Solana reaching past $US68. LINK also proved that it wasn’t a dead project, breaking out of a multi-year downtrend recently hitting $US16.
Crypto-related stocks have also shown some life, with Coinbase (COIN), Mara Digital (MARA)and Riot Platforms (RIOT) all putting in double to triple digit returns over the same period. Crypto bulls view the recent news as an indication that approval for a spot Bitcoin ETF is imminent. Currently, all existing Bitcoin ETFs can only trade Bitcoin futures. Futures are investment instruments based on the potential future price of an asset like Bitcoin.
A spot Bitcoin ETF would be a substantial development as the fund would need to back the shares with Bitcoin holdings, requiring large amounts of BTC to be purchased off the open market. Crypto bulls are confident this would have a significant positive impact on the price of Bitcoin.
This year, a number of institutional investors also entered the crypto fray by applying to launch Bitcoin exchange-traded funds. Following BlackRock’s application, Deutsche Bank announced that it has applied for a licence to hold digital assets in custody in Germany.
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Is the Crypto Winter Over?
While the enthusiasm surrounding the BlackRock BTC ETF cannot be denied, it’s crucial to remember the crypto industry still faces headwinds.
Despite giants like BlackRock, Ark and Grayscale all applying for Bitcoin ETFs, there is no guarantee the applications will be approved in the near future. Crypto bulls should keep in mind that these applications symbolise an anticipatory glow rather than a definite green light.
The sector also faces headwinds from the SEC and similar regulatory bodies worldwide. The digital currency landscape is still navigating an unclear regulatory environment, trying to establish a balance between innovation and consumer protection. Recent lawsuits by the SEC against major cryptocurrency exchanges, such as Binance and Coinbase, are a stark reminder of the sector’s regulatory challenges.
Moreover, the broader macroeconomic landscape cannot be ignored. Global markets are grappling with the dual challenges of rising interest rates and high inflation. These factors are putting pressure on all asset classes, not just cryptocurrencies. The increasing cost of borrowing and the decreasing value of money can act as deterrents to new investors and could potentially impact the overall growth trajectory of the crypto market, as investors park their money in so-called ‘safe havens’.
Despite the promising signs of favourable court wins, the BlackRock ticker listing on DTCC, increasing institutional interest and the recent uptick in Bitcoin’s price, these hurdles remind us that the crypto space is still facing challenges.
What Does Bitcoin’s Bounce Mean for Australian Investors?
Bitcoin’s recent increase in price is a positive sign for Australian crypto investors, signalling potential growth and resilience in the crypto market.
The recent rulings against the SEC have given crypto investors a degree of hope that the tide is turning in their favour. Multiple Bitcoin ETF applications remain pending from big institutional players, too. If approved, a spot Bitcoin ETF could bring cryptocurrencies further into the mainstream, validating their legitimacy in traditional finance. It may influence local investment firms in Australia to delve deeper into digital assets, broadening the local market.
Moreover, positive regulatory decisions in the US, such as approving the Bitcoin ETF, could potentially sway Australian authorities, like the Australian Securities and Investments Commission (ASIC), towards adopting a more favourable stance on cryptocurrencies.
However, recent lawsuits against Binance and Coinbase by the SEC remain in play, and a win for the SEC in these matters could still lead to a similar crackdown in Australia.
This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class. Cryptocurrency is unregulated in Australia and your capital is at risk. Trading in contracts for difference (CFDs) is riskier than conventional share trading, not suitable for the majority of investors, and includes the potential for partial or total loss of capital. You should always consider whether you can afford to lose your money before deciding to trade in CFDs or cryptocurrency, and seek advice from an authorised financial advisor.
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Frequently Asked Questions (FAQs)
Why is Bitcoin up so much right now?
Bitcoin’s recent uptick is due to a few contributing factors. This week, the price surge has primarily been driven by a liquidation event for traders betting that the BTC price was going to fall. As the price began to rise, these traders had to buy BTC back at a higher price to close their bets, creating a cascading effect and driving the price up.
Another key driver is the increasing interest from institutional investors, most notably the Bitcoin ETF application by BlackRock.In November, it was noticed that the ticker symbol $IBTC for the ETF had been added to the Depository Trust & Clearing Corp.’s (DTCC) website, which is a necessary step in preparing for a new ETF to go live.
If the ETF gets SEC approval, it could bring a significant buyer into the crypto market and lend increased credibility to Bitcoin. Additionally, the recent legal victory for Grayscale Investments against the SEC has boosted investor confidence and is seen as a positive step towards the creation of a spot Bitcoin ETF.
What's happening with Bitcoin today?
Today, Bitcoin is experiencing a surge in value thanks to factors such as short traders getting liquidated, investor excitement surrounding BTC ETF approvals and increasing institutional interest for crypto. Crypto traders have been particularly optimistic this month after it was noticed that BlackRock’s preferred ticker for the BTC ETF was added to Depository Trust & Clearing Corporation’s (DTCC) website. This is a necessary step in preparing for the ETF to go live, and does not signal approval, but investors are nevertheless hopeful.
The recent ruling in favour of Grayscale’s attempt to convert its Grayscale Bitcoin Trust into an ETF has also contributed to the positive sentiment in the market in the past month. However, the crypto market is highly dynamic, and the positive sentiment can change quickly.
What will Bitcoin be worth in 2025?
Predicting the exact value of Bitcoin in 2025 is challenging due to the dynamic and volatile nature of the crypto market. Various factors, including regulatory developments, technological advancements, market demand, and global economic conditions, will influence its value. If the BlackRock Bitcoin ETF gets approved, there is a strong argument that this could push the markets much higher than they are currently. Additionally, the recent legal victory for Grayscale and increasing institutional interest are also positive signs for the future value of Bitcoin.
What is the price prediction for Bitcoin in December 2023?
The price prediction for Bitcoin in December 2023 will depend on numerous factors, such as regulatory changes, market trends, and investor sentiment. As we’re currently witnessing increased institutional interest despite regulatory headwinds, the market is cautiously optimistic. The recent court ruling in favour of Grayscale and the ongoing ETF applications by major institutions like BlackRock are positive signs.
However, it’s always advisable to keep up with the latest developments in the crypto market and conduct thorough research before making investment decisions.
What is going on with crypto today?
As of October 26, 2023, the cryptocurrency market was experiencing a bullish sentiment due to the listing of BlackRock’s preferred ticker symbol for their BTC ETF being spotted on the Depository Trust & Clearing Corporation’s (DTCC) website. This is a necessary step in the preparation for the launch of the ETF once it gets approved by the SEC.
This has been interpreted as a sign that the BlackRock spot Bitcoin ETF may be just around the corner, which could give a significant boost to the price of Bitcoin.
Why is Bitcoin going up this week?
As of December 6, Bitcoin’s price has been increasing due to several positive developments. This week, crypto bears lost over $US220 million as their short trades were liquidated. In October, investors noticed that BlackRock’s preferred ticker for their BTC ETF was added to Depository Trust & Clearing Corporation’s (DTCC) website, which is a necessary step in preparing for the ETF’s approval.
It is clear that institutional interest in digital assets is increasing, with giants like BlackRock, Ark, and Grayscale all applying for Bitcoin ETFs. However, it’s important to note that the cryptocurrency market still faces challenges, including regulatory headwinds and broader macroeconomic factors, such as the spectre of interest rate rises and high inflation.
Why is Bitcoin surging?
Bitcoin is surging this week due to the liquidation of $US220 million in short trades, forcing crypto bears to buy BTC to close their losing bets. This surge has developed off the back of optimism surrounding the BlackRock BTC ETF. The ticker for the ETF has been spotted on the Depository Trust & Clearing Corporation’s (DTCC) website, indicating that the prep work for the ETF is well underway.
While the listing of the ticker doesn’t tell investors whether BlackRock’s ETF application will be approved by the SEC any time soon, it is being interpreted by crypto traders as a positive sign. The ETF will differ from existing Bitcoin ETFs in that it will be a spot ETF, requiring the purchase of a large amount of BTC off the open market.
Crypto traders speculate that this could potentially drive the price of BTC up significantly if the ETF were to be approved.
Is it wise to invest in Bitcoin?
Investing in Bitcoin involves high volatility and unpredictability, making it a potentially high-risk addition to your portfolio. Its value can rapidly change due to factors like market demand, regulatory shifts, and technological updates. While Bitcoin’s growing acceptance and limited supply can be attractive, its price is also susceptible to speculative trading, media reporting or other influences. Before investing, assess your risk tolerance and financial goals. Diversifying your investments rather than focusing solely on Bitcoin is generally advised. Stay updated on cryptocurrency trends and consider consulting a financial advisor for personalised guidance. As with all investments, there’s no guaranteed return, and it’s wise to invest only what you can afford to lose.
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