- Bitcoin sees a significant price surge, reaching levels not seen in 18 months.
- Speculation around Bitcoin ETFs contributed to the rally.
- Macroeconomic factors, including inflation, are also at play.
Bitcoin is experiencing a significant surge in its price, reaching levels that have not been seen in the last 18 months. This rally has left investors and market analysts scrambling to understand its driving forces. Various factors contribute to this bullish trend, from speculation around Bitcoin ETFs to macroeconomic indicators.
The Forces Behind Bitcoin’s Rally
The crypto market is buzzing with optimism, with Bitcoin surging 10%, briefly breaking through the $35,000 barrier. This surge is fuelled by various factors, from pending Bitcoin ETF approvals by financial giants to macroeconomic factors.
Bitcoin ETFs Optimism
The optimism surrounding Bitcoin ETFs has positively impacted the crypto market, especially Bitcoin. This has led to Bitcoin’s price smashing through the $35,000 barrier on Tuesday, October 23. This is the first time the major crypto asset reached that level since May of the previous year.
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Several financial institutions, including BlackRock, VanEck, WisdomTree, Fidelity, Bitwise, and Invesco, have submitted applications for Bitcoin ETFs, currently pending approval.
Notably, BlackRock’s iShares ETF recently appeared on a list of ETFs on the clearinghouse DTCC website, sparking speculation that its approval may be imminent.
Inflation Data
Inflation data has been a significant factor contributing to the recent Bitcoin rally. In particular, the cost of U.S. goods and services remained flat in September with a year-over-year rate of 3.7%, the same as in August.
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Despite this, it’s still well above the Federal Reserve’s target of 2%. Inflation peaked at 9.1% in June 2022, and the central bank doesn’t expect it to reach its target until at least 2026. This has increased investor confidence in riskier assets like cryptocurrencies, including Bitcoin.
FTX Asset Recovery
FTX’s recent announcement about refunding up to 90% of distributable assets to customers has also positively impacted Bitcoin’s price. Namely, FTX and FTX US had an estimated $8.7 billion combined shortfall when the crypto firm filed for bankruptcy.
Roughly $6.9 billion of that shortfall, including a Bahamas real-estate portfolio, had been recovered as of September. This significant recovery has been earmarked for repaying creditors and has positively impacted market sentiment, instilling renewed confidence among investors.
Will The Bitcoin Rally Continue?
The sustainability of Bitcoin’s current rally hinges on several key factors: the approval of Bitcoin ETFs and the re-entry of institutional investors into the crypto market. As crypto investors eagerly await the spot ETF approval, a few factors must be considered.
Institutional investors played a pivotal role in the last Bitcoin bull run when the digital asset reached its all-time high of $69,000. However, macroeconomic conditions led to their subsequent withdrawal, crashing the crypto markets.
If these institutional players re-enter the market, especially through ETFs, it could sustain the rally. However, Bitcoin will likely take a hit if macroeconomic conditions change again.
On the Flipside
- While the Bitcoin rally has many investors and market participants optimistic, not everyone is convinced that this upward trend is sustainable. Peter Schiff, a well-known critic of Bitcoin, continues to express skepticism about Bitcoin’s long-term viability.
- On the other hand, some investors have made significant profits from Bitcoin’s recent surge. Michael Saylor’s MicroStrategy is reportedly $734 million in profit.
Why This Matters
The approval of Bitcoin ETFs could open the floodgates for institutional money, providing the market with the stability it needs. On the flip side, macroeconomic factors like inflation rates could either make or break this rally, making it essential for investors to keep an eye on Federal Reserve policies.
Read more about Bitcoin’s huge rally:Â
Bitcoin Smashes $35,000 Upon BlackRock’s BTC ETF Development
Read more about the latest developments in Hong Kong:Â
Hong Kong Reverses Anti-Crypto Stance, Adds Investor Tests
