With Bitcoin’s price rekindling its presence at the $30,000 mark, excitement swells among investors as they anticipate the burgeoning landscape of new BTC ETF applications.
A robust rally in the cryptocurrency market, led by Bitcoin BTC $30,248, Ether ETH $1,918, Cardano ADA $0.298, and a string of altcoins, gains momentum as several prominent institutions take a cue from BlackRock, setting the stage for Bitcoin ETFs in the United States.
The first time since April 18, Bitcoin price touched the $30,000 milestone, solidifying a 36% year-over-year leap since China’s ominous prediction in June 2022 that Bitcoin would nosedive to zero.
The Current Market Wave and Its Longevity
This rally has sparked a wave of short liquidations across the market, racking up over $173 million within 24-hours on June 21. The surge in cryptocurrency prices plays a pivotal role in bridging the value growth gap between equities and the crypto market, a gap that had widened when the Federal Reserve put a pause on interest rate hikes.
However, the sustainability of this rally remains in the balance, as investors keenly watch for any upcoming regulations from the United States Security and Exchange Commission. The dearth of bipartisan consensus on crypto regulations signifies that significant legislation is less likely to pass the U.S. Congress. Consequently, many cryptocurrencies could be categorized as securities by the SEC.
Key Forces Propelling the Cryptocurrency Market Strength
Bitcoin ETF Hype: A Major Driving Factor
Rumors regarding the possibility of the first Bitcoin ETF approval in the U.S. have created a ripple effect, causing a bounce in the crypto market price. The speculation reached a fever pitch when BlackRock, the world’s largest asset manager, filed a Bitcoin spot ETF with the SEC on June 16.
In particular, BlackRock, with its whopping $9.5 trillion in managed assets and a track record of 576 ETF applications with a single rejection, seems poised to make a significant impact. Market analyst Lark Davis speculates that SEC approval could see BlackRock acquiring every available Bitcoin across crypto exchanges.
Rising Bullish Sentiment in the Crypto Market
While Bitcoin and other altcoins face risk events that could affect the price, the shift of BTC futures traders from primarily short to long positions indicates rising bullish sentiment. Coinglass reports that 54.24% of traders are currently long Bitcoin, maintaining a 1.2 ratio compared to BTC shorts.
Together with the reduced spot volume and the net outflow of Bitcoin from exchanges, there may be further price fluctuations. It’s usually observed that when there’s a net outflow of Bitcoin from exchanges, selling pressure decreases, allowing short liquidations to have a greater influence on the BTC price.
Paused Fed Interest Rate Sparks Increased Risk Appetite
On June 14, during the Federal Open Market Committee (FOMC), Fed Chairman Jerome Powell announced a pause in rate hikes for June. While this move was in sync with investor expectations, the cryptocurrency market’s bullish momentum was initially lagging behind the equities market.
Despite the recent blow dealt by negative enforcement news to Bitcoin and Ether prices, a glimmer of bullish momentum can be observed in today’s rally. The Bitcoin Fear & Greed Index has hit a three-month high, indicating that investors are more inclined to take on risk assets.
As a whole, the cryptocurrency markets are likely to continue experiencing price volatility influenced by major events. While the optimistic news of BlackRock’s ETF filing and renewed institutional interest provides a temporary boost to crypto prices, the market’s response to potential enforcement actions or economic recessions will ultimately determine the market’s trajectory.