Analyzing the surge of Bitcoin during week 49, it shattered the $44,000 barrier, marking a significant milestone not witnessed in 20 months. This breakthrough reignited curiosity about how to buy Bitcoin, especially as it began the week just below $40,000 and amassed around $90 billion in market cap, propelling it beyond the $44,000 mark. Let's delve into the factors driving this substantial rise.
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As stated in our Bitcoin week 48 retrospective, the primary catalyst fuelling Bitcoin's remarkable 65% rally since mid-October is the escalating likelihood of multiple Bitcoin spot ETFs. The abrupt yet justified influx of news regarding these spot ETFs aligns closely with the Bitcoin price chart. In October, Bloomberg analysts James Seyffart and Eric Balchunas intensified their tweets, sharing documentation on the ETF approval process, notably supporting imminent approvals, particularly for the BlackRock spot Bitcoin ETF.
For example, as this tweet emerged, Bitcoin surged from $30,000 to nearly $35,000. While these tweets alone didn't trigger the rally by a long shot, institutions and major investors are closely monitoring the same target: spot Bitcoin ETFs. The more likely approval seems, the more willing these investors are. It appears that those well-versed in financial markets understand the significance of these ETFs, whereas those exclusively navigating the crypto realm may not fully grasp their importance. This is fully understandable as ETFs are complicated financial instruments. As expected, substantial increases, like the recent surge, induced FOMO as the masses followed suit. If anything, the rally last week was spurred by those on the fence finally diving in and acquiring Bitcoin, along with the fundamental aspect of these potentially upcoming ETFs.
Looking ahead, one might argue that any positive news about spot ETFs may have limited impact, as the proverbial cat is already out of the bag. Additional news, to influence the Bitcoin price, would likely need to involve actual approvals. The date to remember is January 10th, 2024.
In the long term, investors familiar with Bitcoin are also contemplating the upcoming halving. Despite this, fears of a recession likely will continue to hold some investors back.
This text is intended to inform and is not an investment recommendation.