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(Kitco News) – Bitcoin’s (BTC) climb higher took a breather on Monday as the top cryptocurrency by market cap slid below $37,000 in the early hours, with traders continuing to take profits following last week’s price surge to a new 2023 high near $38,000.
Speculation around the approval and launch of the first spot Bitcoin ETF continues to drive the price action, with some analysts saying that approval could come as soon as Friday, while most are starting to price in an approval by mid-January at the latest based on the dates that the Securities and Exchange Commission (SEC) is required to decide on the submitted applications.
Data from TradingView show that Bitcoin traded around support at $37,000 over the weekend. The early hours on Monday saw bulls make an attempt to push the price higher, only to be rejected below $37,500, which resulted in a pullback to $36,550.
BTC/USD Chart by TradingView
Bulls have since regained some of the lost ground and are battling bears for control of the price action at $36,648 at the time of writing.
“Last week, Bitcoin closed at around $37,000, up by 5.9% compared to the previous week’s closing value of $35,000,” said Matteo Greco, research analyst at Fineqia International. “The week showcased robust price action, witnessing BTC’s fluctuations with consecutive daily price increases from Monday to Friday.”
Greco noted that “BTC dominance, measuring Bitcoin’s market capitalization against the total digital asset market, decreased for the second consecutive week, settling at approximately 52.3%.”
“This represents a 0.7% reduction compared to the preceding week, emphasizing the ongoing dispersion of liquidity among more speculative assets – a characteristic of a phase where investors express confidence and trust in the market, engaging in riskier trades,” he said.
Greco said that trading activity continues to climb, “with the daily cumulative volume on centralized exchanges, calculated on a 7-day moving average, reaching $31.4 billion.” This is the highest level of trading volume since the end of March, which “reaffirms that the recent uptrend is driven by robust trading activity,” he said.
“A noteworthy aspect is the substantial involvement of traditional finance in the recent uptrend,” he said. “For the first time, the BTC open interest on Chicago Mercantile Exchange (CME) exceeded 100,000 contracts, surpassing Binance and becoming the leading venue in terms of open interest for BTC. This strong presence of traditional finance investors is also evident in the narrowing discount of the Grayscale Bitcoin Trust (GBTC), currently at 10.3%, the lowest level recorded since August 2021.”
Greco said the increase in traditional finance activity associated with BTC “underscores the confidence that market investors currently hold regarding a future BTC Spot ETF approval.”
He noted the Jan. 10 deadline for the SEC’s decision on the ARK 21Shares Bitcoin spot filing application, and said there is a strong likelihood that “the SEC will make a definitive decision – approval or denial – before this date, approving or denying all the filings, to avoid providing any issuer with a first-mover advantage.”
“Furthermore, there is a continuous stream of filings for digital asset spot ETFs, with recent news revealing Blackrock’s submission for an ETH Spot ETF, following Grayscale’s decision to file for the conversion of the Ethereum Grayscale Trust (ETHE) into an ETH Spot ETF a few weeks ago,” he said.
“The surge in price and trading activity, particularly through traditional finance channels, coupled with the consistent decrease in GBTC discount and the notable net inflow observed in ETPs with digital assets as underlying, suggests that market investors are placing their bets on an approval,” Greco said. “Securing approval from the SEC would likely draw significant investments from traditional finance, ushering in a fresh influx of investors that could fortify and elevate digital assets to a more recognized asset class.”
“Conversely, a rejection would probably trigger a short-term downturn, given the prevailing expectations favoring approval and the subsequent positioning of market participants heavily influenced by this anticipation,” he warned.
Economist and well-known crypto skeptic Peter Schiff asked his X followers, “When will Bitcoin crash,” with two of the three answers predicting before or after the ETF launch. Disagreeing with the results of the poll, Schiff opted to go with “Before the ETF launch” despite that answer being the least selected by his followers.
Based on the results my guess is that Bitcoin crashes before the ETF launch. That why the people who bought the rumor won’t actually profit if they wait for the fact to sell.
— Peter Schiff (@PeterSchiff) November 10, 2023
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