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Why is Bitcoin going up? – Forbes Advisor
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Bitcoin (BTC) continues its recent upward trend today. The original cryptocurrency is up nearly 6% in the last 24 hours and 15% in the last week.
Today’s gains bring Bitcoin’s year-to-date total return to nearly 70%. However, at just over $70,000, it still remains below its all-time high of over $73,000 set in March.
Bitcoin’s bull week began largely due to weaker-than-expected April inflation data. But the situation has continued due to renewed optimism surrounding the possible approval of Ethereum spot Exchange Traded Funds (ETFs).
In fact, Ethereum (ETH) has also gained ground. ETH is up as much as 23% in the last 24 hours. The leading altcoin is now worth more than $3,800, a significant gain but still far from its all-time high reached in November 2021.
Why is Bitcoin going up right now?
Bitcoin’s latest price increase is largely in sync with Ethereum, as the second largest cryptocurrency received some good news yesterday.
Reports began circulating Monday that the U.S Securities and Exchange Commission, or SEC, has asked various issuers for updates regarding their applications for Ethereum spot ETFs. These reports fueled investor optimism for an approval, as many believed the ETFs were destined for rejection due to an apparent lack of interest from the SEC.
This type of investigation by the SEC is reminiscent of the type of interactions between the commission and issuers that lead to the approval of 11 spot contracts Bitcoin ETFsoccurred in January 2024.
The first spot Ethereum ETF decision is expected on Thursday from investment management firm VanEck, with several more to follow this year. Investors should keep an eye on these decisions, as they will have a significant impact on bitcoin and the overall cryptocurrency market for the remainder of 2024.
Spot Bitcoin ETFs have sent the price of BTC soaring
In the wake of the SEC’s approval of the first bitcoin spot ETFs in the US, BTC has jumped from under $50,000 at the time of approval to over $70,000 today.
Just as many investors expected before the SEC greenlit spot bitcoin ETFs in January, the opening of the world’s oldest cryptocurrency to institutional investors has provided a significant price catalyst.
For example, BlackRock’s iShares Bitcoin ETF (IBIT), one of 11 new bitcoin spot ETFs, purchased more than $778 million worth of BTC on March 11 alone. This added up to 12,600 bitcoins flowing into IBIT’s coffers, reducing the total available supply globally. Furthermore, with the help of growing demand, buying IBIT has increased the overall value of BTC.
Mikkel Morch, founder of digital asset fund ARK36, said in a note: “Positive momentum in the cryptocurrency space is further strengthened by the impact of spot bitcoin ETFs in the US, with very substantial funds continuing to flow in. This development, along with the UK’s regulatory progress shows the growing recognition of cryptocurrencies.
Is Bitcoin Facing a Price Correction?
With the heights reached by bitcoin, the fear of a price correction is spreading in the minds of some traders. Although bitcoin has seen steady growth since the United States introduced spot bitcoin ETFs, cryptocurrencies, including bitcoin, have a history of extreme volatility.
Bitcoin and other cryptocurrencies have suffered after a wave of bankruptcies, collapses and negative rulings that rocked the cryptocurrency world in 2022.
It was there before The Terra LUNA coin debaclewhich started the crypto winter in May 2022.
After a brutal summer that year for cryptocurrency investors, the collapse of major cryptocurrency exchange FTX the following November seemed like a fatal blow to cryptocurrencies.
During that time, bitcoin fell from its pre-crypto-winter high of nearly $65,000 to a low near $16,000 before rebounding.
So, throughout 2023, both the SEC and the Commodity Futures Trading Fee has brought numerous lawsuits against some of the largest cryptocurrency exchanges and companies. Such lawsuits have hindered the ability of many exchanges and other cryptocurrency companies to do business in the United States, the world’s largest economy.
What does Bitcoin’s rebound mean for investors?
Even though bitcoin appears to be in the midst of a significant bull run, there is obviously no way of knowing how high the cryptocurrency will go before we see another correction.
Even as it increasingly appears that bitcoin is once again in long-term growth, traders of BTC and other cryptocurrencies find themselves in unprecedented territory when it comes to several factors. These include the geopolitical climate, economic indicators, cryptocurrency regulation, and the Fed’s intentions regarding interest rates.
Cryptocurrency investors have learned that, even in the best of times, predicting the short-term price action of digital assets is difficult. This is especially true in this market environment.