Bitcoin price rose today, rebounding from the November 21 correction to $35,651 and hitting an intraday high of $37,431. The rally comes after Bitcoin prices rebounded 3% as traders digested Binance’s agreement with the U.S. Department of Justice (DOJ). The agreement has reignited hype around traders’ belief that a spot BTC exchange-traded fund (ETF) will soon be approved, which will lead to significant inflows into Bitcoin and boost prices across cryptocurrency markets.
Let’s take a look at why the price of Bitcoin rose today.
The Binance Story Ends with Agreement
Initially, Bitcoin (BTC) price sent mixed signals following Binance co-founder Changpeng “CZ” Zhao’s guilty plea and the Justice Department’s $4.3 billion settlement with Binance. After taking some time to digest the results, the market began to notice that the Binance exchange was not experiencing large-scale outflows like FTX when the liquidity crisis first became public.
Here are the latest updates: @Binance12 hours later than before
At the time of this writing, withdrawals are continuing and no major outflows are visible.
In the last hour, Binance had a negative net flow of $17 million on Ethereum. pic.twitter.com/yQPtMl5ue8
— Nansen (@nansen_ai) November 22, 2023
Despite the DOJ settlement, Binance’s Bitcoin holdings are only down 17% from their all-time high. In comparison, FTX BTC holdings are 99.9% depleted from their all-time high when the exchange rose in November 2022.
Binance’s Bitcoin holdings are at their lowest since 2017, but it maintains the largest amount of BTC compared to other centralized exchanges.
#Binance Analysis of Bitcoin holdings after settlement with DOJ.
It is better to analyze reserves comparatively.1. Reserves, which were already declining, are now down 17% from their previous high, the lowest since 2017.
2. But Binance’s Bitcoin… pic.twitter.com/lpY2u65V5p
— Julio Moreno (@jjcmoreno) November 22, 2023
Approval of a potential spot BTC ETF boosts market sentiment.
Despite several macro headwinds, Bitcoin price continued to rise, achieving a year-to-date gain of 124% amid increasing volatility. Some Bitcoin analysts say The Binance-DOJ agreement is optimistic about approving a spot Bitcoin ETF, noting similar deals achieved by Arthur Hayes and BitMEX.
The Bitcoin Fear and Greed Index remained in “greed” territory, showing continued upward market sentiment over the past month.
After a flurry of spot Bitcoin ETF revisions in mid-October, the Securities and Exchange Commission (SEC) has so far BlackRock refuses to approve spot Bitcoin ETF despite numerous applicants including Fidelity. ARK Invest and 21Shares.
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After delaying approval on the November 17 deadline, the SEC’s next deadline is January 10. Both Grayscale and BlackRock executives met with the SEC on November 20 to discuss approving a Bitcoin ETF.
Approval could create $600 billion in new demand, according to the report. CryptoQuant analysts believe that ETF approval will increase Bitcoin market capitalization by $1 trillion.
Galaxy Digital expects the price of its spot BTC ETF to rise 74% in the first year following its launch.
Institutional inflows exceeded $1 billion.
While some investors may be waiting for an increase in liquidity from approved ETFs, institutional investors have already begun deploying money into Bitcoin and cryptocurrencies. According to CoinShares, institutional investors have invested more than $1 billion in cryptocurrency funds over the past year.
Related: Bitcoin’s ‘dominance’ at 51% — Is this a misleading metric?
Of the $1 billion, more than $240 million went to Bitcoin. Last week, Bitcoin alone saw $155 million of institutional inflows.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.
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