Bitcoin’s rapid-fire ascent to $44,000 comes on the back of roughly 25% gains in the last week. The grandfather of all cryptocurrencies has had an even more lucrative 2023, rising 158% from its year-ago levels, according to CoinMarketCap data.
Given how long the crypto world has been dealing with a downturn, what’s driving Bitcoin’s price ascent and similar value gains among other tokens? And can the good vibes continue into the new year?
“The main impetus for the bitcoin price rise seems to be the upcoming approval of the [spot] bitcoin ETF and the additional capital flows that will follow after the ETF is live,” said Tegan Kline, CEO of Edge & Node, a company that is behind a protocol for organizing blockchain data.
Luke Nolan, a research associate at CoinShares, thinks the “kick-off” of this Bitcoin rally came on the back of the mid-October ruling from the D.C. Circuit Court of Appeals that closed the June 2022 suit between the SEC and digital asset manager Grayscale. The federal court issued a final ruling that ordered the SEC to rescind its rejection of the firm’s Bitcoin spot ETF application.
“We have seen tremendous buying for two reasons as a result of this,” Nolan said. “People front-running what they believe will be significant flows stemming from the potential launches of the ETFs [and] if the SEC approves a spot bitcoin ETF, there is a ‘stamp of approval’ for the asset class from the largest capital market regulator in the world.” If that happens, bitcoin could see more capital inflows, potentially boosting its value.
Bitcoin’s price surge into year-end has been exceptionally encouraging, as it has been accompanied by the highest trading volume it has seen since November 2022, said Joel Kruger, LMAX Group currency strategist.
“Of course, one of the main fundamental catalysts is coming from anticipation of mass institutional and mainstream adoption in 2024 as channels are opened up that will allow for easier access to bitcoin exposure,” Kruger said.