Boom!
Bitcoin exploded in the past week. In just a few days, its value increased by more than $8,000. All while three weeks ago I expressed my cautiousness because of a looming recession. Yet, Bitcoin seems unaffected by those recession fears. At least for now. But what fueled this recent surge? And where is Bitcoin headed?
Bitcoin’s ETF approval
As discussed in "TradFi embraces crypto", BlackRock - the world's largest asset management firm - submitted an application to the SEC for a Bitcoin ETF back in June. And that was a big deal. Many of BlackRock’s competitors have been trying to get their Bitcoin ETFs approved for quite some time, however without result. But BlackRock plays in a different league. Out of 576 times they've applied for ETFs in the past, only one of them got rejected. So since BlackRock filed for a Bitcoin ETF, the question no longer remains if we’ll get a Bitcoin ETF, the question that everyone’s asking is when it will happen.
The recent spike in Bitcoin seems to be tied to this ETF application. Last week, Cointelegraph accidentally posted a fake news story announcing the BlackRock ETF got approved. Instantly Bitcoin shot up by over $2,200 in just an hour, to retrace most of the pump when news broke that Cointelegraph was wrong.
But since then, Bitcoin has been on a roll. It seems like the mistake from Cointelegraph woke up a lot of investors to the fact that the actual ETF approval might be right around the corner. And chances are that that’s true. On January 10th, the SEC will decide on the ETF applications from 21Shares and ARK. And by March 15th at the latest, they’ll make a decision on the BlackRock ETF.
A result of the recent spike is that Bitcoin broke out of the range it had been trading in for more than 6 months. And with that breakout, continuation until $40k - and maybe even a bit higher - seems likely.
For now, Bitcoin doesn't seem bothered by recession fears. I believe it has the momentum to keep going until $40k-$45k, but nonetheless, I will keep a potential recession in the back of my head and trade with caution.
Meanwhile most alts don’t perform too well, as Bitcoin sucks liquidity from the rest of the market. But when Bitcoin starts nearing $40k-$45k, I think many alts might start to catch up.
I'm especially watching Ethereum and Hedera in the coming months. I like both projects and expect them to survive in the long run. And right now, both are trading at pretty good prices compared to Bitcoin.