3 Reasons BTC Soared to $29K and Can It Continue Higher?
Bitcoin’s price is up over 7% in the past 24 hours – a move that resulted in a spree of liquidations, the majority of which were, expectedly, short.
Interestingly, this comes amid times of considerable uncertainty in the United States in terms of regulatory clarity. The SEC recently filed two lawsuits against the world’s leading cryptocurrency exchanges – Binance and Coinbase, alleging both of them violated securities laws.
So, why is Bitcoin’s price surging? Well, here are a few possible reasons.
BlackRock Filed For a Bitcoin ETF
BlackRock is the world’s largest asset manager, and it made a massive step forward toward legitimizing Bitcoin as an asset class that’s investment worthy.
The company filed for a spot Bitcoin Exchange-Traded Fund (ETF) with the United States Securities and Exchange Commission.
While this might sound like a tale of old, there’s one worthwhile difference between BlackRock and all the other companies who have filed for a spot Bitcoin ETF so far. The former has an ETF success rate with the SEC of 575 to 1.
That’s right. BlackRock has filed 576 applications and saw only one of them denied. And it was almost a decade ago.
Needless to say, an approved Bitcoin spot ETF is expected to have considerable implications on the entire industry as it would legitimize the asset and allow institutional investors to get involved without the underlying worries that they’re currently facing.
It appears that the market finally caught up to the news and reacted the way most expected it to.
More Bitcoin ETF Applications
The above has given wings to other big companies to renew their efforts or to start from scratch. WisdomTree – a global financial firm – is trying once again to start a spot Bitcoin ETF in the US. The filing came yesterday.
Invesco – another investment management company with around $1.4 trillion worth of assets under management – also reapplied for a spot BTC ETF. The company first filed with the SEC back in 2021 in conjunction with Galaxy Digital.
It appears that BlackRock’s application has given much hope that the application will go through, thanks to the company’s reputation, stature, and size.
Wall Street-Backed Crypto Exchange EDX Goes Live
A cryptocurrency exchange called EDX, that’s backed by Charles Schwab, Citadel Securities, and Fidelity Digital Assets, has launched and officially started trading yesterday, according to recent CNBC coverage.
It’s interesting to note that the exchange allows trading of select cryptocurrencies such as BTC, ETH, LTC, and BCH – none of these were named “crypto asset securities” in the recent lawsuit that the Securities and Exchange Commission of the US filed against Coinbase and Binance.
Can the BTC Price Go Higher?
In its latest Bitfinex Alpha report, analysts from the popular exchange noted the resilience of the crypto market amid the ongoing regulatory turbulence in the US.
However, they also argued that despite the significant move upward, the price failed to spawn a short squeeze.
Bitcoin’s swift rebound last week from the significant $25,000 barrier did not spawn a short squeeze, indicating that the price appreciation was not a consequence of short liquidations but perhaps, the result of sizable futures long positions holding up the price.
For those unaware, a short squeeze happens when there’s a cascading liquidation spree of short positions. When a short position gets liquidated, it’s closed forcedly. To close a short position, there must be a corresponding buying order. Therefore, when many short positions get liquidated at once, this puts considerable upward pressure on the price, resulting in a quick increase. Conversely, a long squeeze does the opposite.
Bitfinex argues that the market hasn’t experienced that yet, which leaves the door open to speculation that if the bulls manage to continue pushing the price up, it could eventually trigger a short liquidation cascade, catapulting the price higher.
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