Bitcoin Price Hit 1.5-Year High!
Bitcoin Made a Double-digit Surge Overnight!
Has Bitcoin Bull Run Started?
If you are an avid crypto investor or enthusiast, you must have recently seen these electrifying headlines on social media or news. With the Crypto market finally getting its spark back and investors witnessing long-awaited greens in their portfolios, it is clear that something big is cooking in the crypto space.
Understanding the driving forces behind these monumental changes requires exhaustive research work. But fret not, as we have shouldered the research burden for you. This blog compiles all the essential factors to comprehend the ongoing Bitcoin price surge.
But first, let’s quickly discuss the recent Bitcoin price performance that made its investors tickled pink.
Bitcoin Price Performance in October 2023
At the beginning of October, Bitcoin prices slowly trended upward by surging 4% between October 1 and October 2, reaching $28,300. This price increase made investors optimistic about October. However, the gains did not last longer as Bitcoin price adjusted to nearly $26,770 in the next two weeks.
Things again took an exciting turn on October 16, when a rumour claimed that the SEC (Security & Exchange Commission) approved Blackrock’s Spot Bitcoin ETF application.
For those who do not know, the USA does not have any native Bitcoin Spot ETF yet, as the SEC keeps rejecting all Spot Bitcoin ETF requests, giving inadequate investor protection as the reason. However, this year, Bitcoin Spot ETFs again gained popularity when an investment giant, Blackrock, applied for Bitcoin Spot ETF on June 15.
Since such a big name from the investment space, with a good record of approved ETF requests, showed interest in Bitcoin Spot ETFs, it instantly made headlines. Many Bitcoinists have set their eyes on the approval of this Bitcoin ETF, as it is likely to become the reason for the next Bitcoin bull run. Thus, optimism kicked into the market when the rumour spread about the SEC approving Blackrock’s Spot ETF application, pumping the price of Bitcoin from $27,900 to $30,000 within minutes.
This rumour ignited through an unverified tweet by a well-known crypto-centric digital media resource, Cointelegraph, stating that Blackrock’s Bitcoin Spot ETF request was approved. The media firm deleted the tweet nearly 30 minutes after Blackrock's confirmation that the report was false. As a result, Bitcoin fell from $30,000 to $28,000.
But that was not it. Almost a week after this incident, Bitcoin again surprised investors by surging $35,000 on October 23, 2023. This 11% pump in 24 hours occurred due to the swell of optimism in the crypto market that the SEC will approve Bitcoin ETFs soon.
BlackRock’s Bitcoin Spot ETF’s name appeared on the Depository Trust and Clearing Corporation (DTCC) website under $IBTC. It shows the confidence of BlackRock in its win towards getting approval on its Bitcoin ETF application. When the investors noticed this, they again adopted a bullish attitude and took a long position in BTC, increasing its price. At the time of writing, Bitcoin is trading at $34,145.
But when it comes to the current Bitcoin price pump, there is more to this than what meets the eye. Several factors are causing the uplifting of the Bitcoin price. Let’s look at them one by one.
Factors Driving The Recent Bitcoin Price Surge
Five key factors are contributing to the current Bitcoin price surge
Approaching Approval of Bitcoin Spot ETF
As discussed above, the Bitcoin ETF has been the critical propeller in the bitcoin price this year. Top fund managers from the USA, like BlackRock, Fidelity, Invesco, WisdomTree, Bitwise, Ark Invest, Valkyrie Investments, and VanEck, applied for Bitcoin ETFs one after the other. Such bulk interest of prominent players in Bitcoin has become the linchpin in Bitcoin's popularity this year. The current events hint that Bitcoin Spot ETFs nearing their approval are giving significant price pumps to Bitcoin.
It is important to note that BlackRock has an impeccable record of 575 approved ETF applications out of 576 applied. Thus, its Bitcoin Spot ETF has a high chance of approval. Even Bloomberg’s senior ETF analysts, James Seyffart and Eric Balchunas, predicted that its Bitcoin Spot ETF has a 90% chance of approval by January 2024. It is a sign of the odds for Bitcoin ETFs getting better because these analysts predicted a 50% chance a few months ago.
This year’s Bitcoin ETFs have a distinct feature of the surveillance-sharing clause, stating that fund managers will share customer details related to trading with the regulating authority. This move is supposed to address the SEC’s concerns regarding Bitcoin’s autonomous nature. Another exciting factor strengthening the chances is the recent win of Grayscale (the world's leading crypto asset manager) over the SEC lawsuit, where the court asked the SEC to review its cancellation of Grayscale’s application that asked for converting its Bitcoin trust into Bitcoin ETF.
The idea behind anticipation for Bitcoin Spot ETF approval is that once BTC ETFs get a green signal from the SEC, they will bring a boatload of funds into Bitcoin that will skyrocket the asset’s price.
A catch here is that the deadline at which SEC will have to give its final decision on Bitcoin ETF applications is in January, only a few weeks before the next Bitcoin Halving.
This brings us to the second factor driving the current Bitcoin rally: the upcoming Bitcoin Halving.
Nearing the Next Bitcoin Halving 2024
Even if the Bitcoin ETFs are not approved by the first quarter of 2024, investors do not have to throw in the towel yet. This is because the pre-scheduled Bitcoin halving event will occur in April 2024.
Bitcoin halving is an event that occurs every four years that reduces the Bitcoin mining reward to 50%. Since the current Bitcoin mining reward is 6.25 BTC, it will reduce to 3.125 BTC in the next Bitcoin halving 2024.
Historically, the significance of Bitcoin halving in the bull run is quite positive. Every halving event (2012, 2016, 2020) has triggered a strong bull run for Bitcoin and other cryptocurrencies. Thus, investors eagerly invest in Bitcoin to make the most of the next halving, likely initiating the much-awaited bull run.
How?
Let’s understand.
Bitcoin halving will reduce the number of new bitcoins entering the crypto market. A reduced supply will create a scarcity of Bitcoin among its potential buyers, who may propose a higher price to buy it, leading the Bitcoin price to rise gradually. Notably, over 92% of Bitcoin’s total supply (21 million) has already come into circulation, and thus, the remaining supply is likely to create FOMO among investors. Even the historical data shows that Bitcoin's halving has marked the beginning of a bull run multiple times. Thus, the expected bullish market sentiments for the next halving are also driving up the price of this asset.
Many analysts are proposing a fascinating scenario: the occurrence of Bitcoin spot ETF approvals and Bitcoin halving within a gap of only a few weeks. With big finance giants buying Bitcoin to fund their ETFs and bitcoin supply reducing with halving, investors expect a gigantic bull run in 2024 or 2025. The anticipation of this scenario is making Bitcoin register current double-digit hikes.
FED Pausing Interest Rate Hikes
Another factor adding to the Bitcoin rally is the brakes the FED (Federal Reserve System) has applied to their interest rate hikes. As many of you already know, FED is the name of the Central Bank of the USA. It keeps revising its federal fund rates (the interest rate at which banks and credit unions lend each other money without collateral) to maintain a healthy economy and moderate inflation. This dynamic interest rate management is designed to nurture a robust economy and average national inflation. However, the ripple effect of these FED-driven rate adjustments extends far and wide, casting its influence over virtually all investment markets, including cryptocurrencies. As these interest rate hikes elevate the cost of borrowing for investors, It instils bearish sentiments in the market, prompting individuals to be more cautious with their expenditures. Moreover, cryptocurrencies' inherently risky and volatile nature further deters potential investors during FED interest rate increases, leading to hesitancy within the crypto investment sphere.
Since 2022, the FED has increased its interest rates 12 times from 0.25% to 5.50%. These significant surges have affected the crypto market multiple times, establishing a direct correlation between them. After July 26, 2023, FED applied brakes on its interest rates and announced no change—this pause in rate hikes infused some positive sentiments in the market. A historical instance of such an event was recorded between 2019 and 2021 when the FED put a seven-month pause on its interest rate hikes and then a significant backdrop. It contributed to Bitcoin price rallying a stellar 325% within months.
Investors think that history will repeat as the FED has once again stopped its interest rate hikes.
Learn more about how FED rate hikes affect crypto prices.
More Discussions on Crypto Regulations
2023 has seen a remarkable change in the stance of various financial institutions towards Crypto and its regulations. Several essential and insightful sessions took place on setting effective crypto regulations in different countries. One of them is the G20 summit with India’s presidency this year that focussed on regulating crypto assets, among other things.
During this presidency, the Financial Stability Board and the IMF joined hands to frame comprehensive crypto regulations after realizing its need amid the rising crypto economy. They discussed licensing crypto asset issues and a consensus agreement on not banning Crypto. The G20 leaders also agreed to cooperate in setting up a global framework for crypto regulations and taxation in the upcoming years.
Two other key event highlights have been the G20’s call to implement the Crypto Asset Reporting Framework (CARF) and the Common Reporting Standard (CRS) changes. These frameworks addressed the rapid growth of crypto assets and the regulations required to improve the safety and transparency of the crypto space. While global crypto regulation is still not achieved, recent discussions have brought Crypto closer to it. The rising attention of international financial authorities in setting up crypto regulations surges the interest of institutional investors who were hesitant to participate due to a lack of regulations. Thus, it can also be a reason for the occasional price surges in Bitcoin and other blue chip coins.
Bitcoin Regaining Its Dominance
Due to all the above four factors, Bitcoin is making a solid comeback in regaining its dominance, further boosting its price. Market Dominance of Bitcoin measures the ratio of its market cap to the cumulative market cap of all cryptocurrencies. This market dominance hit a 30-30-month high by shooting 54.4%, the highest since the raging bull market in 2021. For months, the BTC dominance fluctuated between 39% and 49% before finally crossing the 50% mark and rising further. The two most important reasons behind this surge are the news about BlackRock applying for Bitcoin ETF and strengthening the narrative of BTC as a haven during bank runs this year.
Moreover, the crypto fear greed index, which indicates the emotional state of the market, has shown a notable fluctuation in the last few weeks. The index was rigidly fluctuating in the “neutral” zone at the score of 45-50 for weeks. However, in October, it made a noteworthy shift to first 66 and then 72, indicating the “greed” sentiment. It shows that the investors are regaining their bullish sentiments towards Bitcoin and, hence, investing capital into the asset.
What’s Next for Bitcoin?
Considering all the above factors, things align for a strong bull run for Bitcoin. After facing the catastrophic fall of FTX and other crypto institutions, the crypto market is recovering.
The upcoming 2-3 months will be crucial for Bitcoin as the final decision of the SEC on Bitcoin Spot ETF requests can come. If things go in favour of Blackrock and other ETF applicants, a Bitcoin Bull run is inevitable in 2024. However, the market may lose the recent gains if things go south in the ETF matter.
With the next FED meeting scheduled for October 31 - November 1, 2023, and then December 12-13, the remaining months of this year can see interesting twists in Bitcoin price. If the FED withstands its decision to pause interest rates or reverse these rates, the bullish sentiments may improve, and Bitcoin price can see higher jumps. If the FED decides to surge interest rates again, the market may face a bullish scenario for a short-term duration.
To Put It Briefly
The recent surge in Bitcoin prices has undoubtedly captured the attention of investors and enthusiasts alike. The factors driving this remarkable rally are both diverse and compelling. The impending approval of Bitcoin Spot ETFs, with significant players like BlackRock at the forefront, is pivotal in this crypto resurgence. The potential combination of ETF approval and the forthcoming Bitcoin halving in 2024 paints an exciting picture for Bitcoin's future.
Furthermore, the Federal Reserve's decision to pause interest rate hikes offers hope for the crypto market, as it historically correlates with positive price movements. The ongoing discussions on crypto regulations on a global scale have also boosted institutional interest, further reinforcing Bitcoin's resurgence. The next few months, marked by the SEC's decisions and potential FED actions, promise to be critical for Bitcoin's trajectory. Stay tuned, and let's see where this thrilling journey takes us.
If you feel inspired by the reasons behind Bitcoin's surge and are ready to seize the opportunities in the surging Bitcoin, take the first step and buy Bitcoin.
