There are signs of a resurgence in Bitcoin optimism this week, with the top cryptocurrency heading towards the $40,000 level. Driving the new bullish momentum are several key factors, including the withdrawal of over $1 billion of BTC from exchanges last week and rising expectations of the approval of a US spot Bitcoin ETF in the coming months.
key point
- More than $1 billion worth of Bitcoin was withdrawn from exchanges last week, suggesting optimistic investor sentiment.
- Bitcoin price is expected to hit $40,000 again after trading above $38,800, taking gains from the broader cryptocurrency market.
- A rate cut by central banks in 2023 could result in more capital flowing into the cryptocurrency market.
- Expectations are growing for possible SEC approval of a spot Bitcoin ETF in early 2024.
- Technical experts show that Bitcoin has broken above a key resistance level on the lower period chart.
On the technical front, Bitcoin broke above the $38,000 resistance level early on Friday and has surged above $38,800 in the past 24 hours, registering a 5% gain. The broader cryptocurrency market has also rebounded, with total market capitalization surpassing $1.5 trillion this week for the first time since the collapse of TerraUSD in May 2022.
There is strong evidence behind Bitcoin’s push that holders are holding their coins directly in hopes of higher prices. According to Glassnode, since November 17, more than 37,000 BTC worth $1.4 billion have left central exchanges. These outflows are generally a sign that investors prefer a long-term buy-and-hold strategy rather than selling Bitcoin in the short term.
Adding fuel to the fire of optimism are Federal Reserve Governor Chris Waller’s recent remarks that easing inflation could justify interest rate cuts in the coming months. Low interest rates tend to benefit assets like Bitcoin, making cryptocurrencies more attractive compared to bonds. With the possibility of a change in central bank policy in 2023, cryptocurrency traders are eyeing Bitcoin’s next benchmark of $40,000.
However, the biggest driver appears to be the hype surrounding potential regulatory approval for a spot Bitcoin exchange-traded fund (ETF) in early 2024. Signs point to possible SEC approval for a spot Bitcoin ETF sometime between January 5 and January 10. Mainstream investors can be easily exposed to Bitcoin price fluctuations. Prospects are charging Bitcoin bulls.
Amidst technically flashing bullish signals, massive Bitcoin accumulation by long-term holders, and growing expectations of a “holy grail” event for the cryptocurrency industry in the U.S. spot Bitcoin ETF, Bitcoin could hit $40,000 resistance in the coming months. It appears that the stage will be set to challenge again.