Bitcoin recently crossed the $44,000 mark, making it its best performance since the summer of 2022. Its price has more than doubled since the beginning of 2023.
It has been following a bullish trend for several months and there are indications the crypto coin may well be on its path to glory, which was once conceived before the Russia-Ukraine war erupted and China shut down most of the cryptocurrency ‘mining’ centers running there.
And then there was the FTX collapse. Someone with a name containing ‘Bankman’ was touted by the world to be a crypto genius. Ironically, he claims to have found inspiration in ‘Effective Altruism’, but practiced the very opposite.
One of the biggest factors driving the current Bitcoin uptrend is the expectation of a US Fed Reserve cutting interest rates in the New Year. The other underlying factor is that a potential Bitcoin ETF approval is on the cards. While the FTX fiasco pushed down the crypto market, the Binance-DoJ settlement sent out signals that the government cared about potential impacts on regular investors.
Is Bitcoin back up on its journey to greatness? The recent surge may just be an indication of that effect.
The anticipation of interest rate cuts by the Fed has made an impact on commodity prices. Besides Bitcoin, gold has recorded historic prices.
The talk of a US economic recession has been in the air for a long time. So, an interest rate cut is waiting to happen somewhere in the near timeline. The consensus level for this move among fund managers is the highest ever seen.
Recent Crypto Investment Developments
The growth in BTC’s price is related to the rush in demand among crypto investors. Investors are especially interested in seeing the listing of Bitcoin ETFs.
This expectation has also made a positive impact on the value of their crypto-based assets. Many crypto-related companies have experienced a surge in their stocks. This includes crypto mining platforms and exchanges.
Confidence in Potential Bitcoin ETF Approval
Industry experts are optimistic that the SEC can release the first series of approvals for bitcoin ETF applications in the early part of 2024. An approval can mean the ETF will start getting listed and traded on stock exchanges, paving the pathway for investors to benefit from BTC and its price movements in a regulated way. It will be a big break away from the current modus operandi.
It is worth mentioning that BTC is still a highly volatile and tentative asset.
Many global asset management conglomerates are looking up to the SEC’s decision on bitcoin ETF. Some of the biggest names in this list include BlackRock, Valkyrie, Fidelity, 21Shares, WisdomTree, and ARK Invest.
The likeliness of a Bitcoin ETF getting approval increases further when you consider the following factors:
- Recently, a federal appeals court asked the SEC to reassess a Grayscale Investments application seeking to turn its BTC trust into an ETF.
- BlackRock, the largest asset manager, updated its spot BTC ETF filing and is reported preparing for the launch.
Even CoinDesk’s Bitcoin Trend Indicator points to a significant upward trend for BTC. The Bitcoin Fear & Greed Index also retains a ‘Greed’ indicator.
A BTC ETF approval is expected to generate around $600 billion in terms of new demand, which can increase Bitcoin’s market cap by $1 trillion. Some market predictors claim that Bitcoin’s price can increase by over 70% within the first year after a spot BTC ETF launch.
Recent Binance & Justice Department Settlement
There is another factor that is claimed to make a positive impact on the crypto universe. It is the recent $4.3 billion settlement between Binance and DoJ.
Binance Didn’t Steal People’s Money
Firstly, many industry proponents believe that this settlement has satisfied the regulators and investors of Binance’s credibility. What the settlement proved was that Binance’s case was not similar to that of FTX. The largest Bitcoin exchange didn’t ‘steal people’s money’, but was fined for serious violations of KYC norms.
Binance corrected its mistakes, paid up the fine, and is now back in business. Many industry insiders and outsiders see it as a ‘net positive’ for both the crypto exchange and the industry.
Binance is Too Big to Fail
The recent settlement between Binance and the Department of Justice required the former to pay up a fine and meet certain conditions. While the agreement doesn't mean that the DoJ cannot pursue further charges against the exchange’s CEO, the company can continue its operations.
The DoJ’s decision to come to a settlement in place of a trial is expected to be taken keeping in mind the impact on the exchange’s users and the crypto industry itself. According to legal experts, the authorities concluded that the criminal prosecution of the company was not worth it. The potential impact of a conviction could have been massive on the employees, shareholders, and users.
In its simplest form, the situation is that Binance has become too big and the U.S. government doesn't want to see it fail in the greater public interest!
At its peak, Binance accounted for two-thirds of global centralized exchange crypto trading activity. This was right after the collapse of FTX. The last time reports came out, the exchange continued to hold a two-fifth market share. In other words, it is still the largest global crypto exchange in terms of the transaction volume it handles.
Annual Institutional Inflows Worth $1.86 billion
Institutional investors have already seen a direction in the crypto market’s price movement. It is not for nothing that they have already parked over $1.86 billion in BTC and other cryptos over the past year.
It probably doesn't take much of a guess as to where most of those funds were deployed in – yes it was in Bitcoin and it was a staggering $1.66 billion in amount.
Can Bitcoin Touch $1 Million Mark?
Bitcoin enthusiasts have always been overly optimistic about future BTC pricing. Even back in 2014, when the top coin was trading at around $400, many were predicting it to cross $40,000 in a few years. It was an impossible prediction for the time, yet Bitcoin surprised the world and made many millionaires and multi-millionaires over time.
After the recent bull run, many are claiming a potential $1 million price band in the near future. Samson Mow of JAN3 is one of those proponents. He gives BTC the next 5 years to touch $1 million.
However, there is no dearth of wild guesses that put a much shorter time limit on that ‘magical’ goal. Standard Chartered predicts Bitcoin can touch $1,20,000 at the conclusion of 2024.
Then, there are others who place a 10-year limit on that figure. Until that happens, we can keep our fingers crossed!
Nota bene: This is not an investment recommendation or advice. All investments and trading efforts involve risk and readers must perform their own research and study when making decisions.
References:
Fastcompany, CNBC, Cointelegraph, Forbes, Forbes, Cointelegraph & Wired