Bitcoin makes a comeback, but can it stick the landing?

  • Bitcoin has shot up to its best price in 18 months, sitting around $33 900 as of time of writing.
  • The recent surge is on the back of investor excitement over the possibility that a new type of trading fund specifically for the token will be launched by multiple firms.
  • This fund should generate more attention for the cryptocurrency, but some analysts believe the current trend could be short lived.

As if from nowhere Bitcoin has leapt to heights it hasn’t seen in the last 18 months, touching $35 000 on Monday before settling at $33 964 at the time of writing. The most important cryptocurrency’s rally is a return to form it hasn’t seen since May 2022 assuaging investors that perhaps the token is emerging from a long wintery hibernation.

After reaching its all-time high of over $60 000 in November 2021, Bitcoin dropped rapidly and saw its most disappointing month in 11 years after June 2022 when it fell 37.3 percent losing more than half of the rapturous levels it saw not seven months prior.

Owing to its volatile nature, the token bounced up and down for most of 2022 and 2023, but it is clearly on an upward trend after the latest surge.

Image sourced from Google Finance.

Bitcoin’s price has almost doubled since the beginning of the year, while knock-on effects from the rally has pulled Ether to $1 800 touching a price the second cryptocurrency hasn’t seen since August.

According to Reuters, Bitcoin’s latest leap is due to a combination of several factors that have been playing out individually over the last few weeks. Investors have been building excitement about the possibility for the token to be included in exchange-traded funds (ETFs).

This type of fund would allow anyone on the fence about trading in the crypto markets some exposure to Bitcoin through the US stock market.

Several major investment firms have pending applications for such crypto funds, including large firm BlackRock which is anticipated to have been given the all-clear to launch its own fund. Further evidence of this is the listing of BlackRock’s “iShares Bitcoin Trust” on a clearing corporation website, which is seen by analysts as a crucial step in the launching of a Bitcoin ETF.

Adding to these expectations are reports that the US Securities and Exchange Commission (SEC) won’t appeal a court ruling that the regulator should not have rejected an application from Greyscale Investments to create a bitcoin ETF. While this doesn’t mean the Greyscale ETF is approved, clearly investors believe that it is only a matter of time.

To put it simply, Bitcoin is on the rise because investors are hoping for a crop of brand new potential buyers becoming interested in the token and other crypto thanks to the imminent launch of these ETFs.

However, before you scramble to your favourite crypto trading app, CoinDesk cites analysts who believe recent gains may be short-lived. This is because the surge on Monday is based solely on the positive sentiment of the believed ETFs launching.

Further, an overview of the Bitcoin blockchain shows that despite the price boost, transactions are down by 50 percent in a month and the Bitcoin network’s economic capacity was also in a downtrend. In fact, Bitcoin experienced a similar rally in July this year only to see its price drop to middling levels once again in short order.

[Image – Photo by Kanchanara on Unsplash]


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