Signs of resurging bitcoin optimism have emerged this week, with the top cryptocurrency eyeing a run toward the $40,000 level. Driving the renewed bullish momentum are several key factors, including over $1 billion worth of BTC withdrawn from exchanges in the past week and building anticipation of a U.S. spot bitcoin ETF approval within months.
Keypoints
- Over $1 billion worth of bitcoin was withdrawn from exchanges in the past week, suggesting a bullish investor mood
- Bitcoin price eyes $40K again after trading above $38,800, leading to gains in the broader crypto market
- Expected interest rate cuts by central banks in 2023 could attract more capital to crypto markets
- Anticipation is building for potential SEC approval of a spot bitcoin ETF in early 2024
- Technicals show bitcoin breaking out above key resistance levels on lower timeframe charts
On the technical front, bitcoin staged a breakout above $38,000 resistance early Friday, reaching over $38,800 and notching gains of 5% over the past 24 hours. The broader crypto market also rallied in tandem, with total market capitalization topping $1.5 trillion this week for the first time since the collapse of TerraUSD in May 2022.
Behind bitcoin’s push lies strengthening evidence of holders taking direct custody of their coins in expectation of higher prices. According to Glassnode, over 37,000 BTC worth $1.4 billion has left centralized exchanges since November 17th. Such outflows typically signal investors are biasing towards a long-term, buy-and-hold strategy rather than looking to sell bitcoin in the near-term.
Adding fuel to the bullish flames are recent comments from Federal Reserve governor Chris Waller, who said moderating inflation could justify rate cuts within months. Lower rates tend to benefit assets like bitcoin, making the cryptocurrency more attractive relative to bonds. The rising probability of central bank policy pivots in 2023 has crypto traders eyeing the $40K threshold next for bitcoin.
However, the biggest driver looks to be building hype around a potential regulatory greenlight for a spot bitcoin exchange-traded fund (ETF) in early 2024. Signs are pointing to possible SEC approval for spot bitcoin ETFs sometime between January 5th and January 10th, which would allow mainstream investors easy exposure to bitcoin price moves. The prospect has bitcoin bulls charging.
With technicals flashing bullish signals, heavy bitcoin accumulation by long-term holders, and expectations heightening around the crypto industry’s “holy grail” event in a U.S. spot bitcoin ETF, the stage looks set for bitcoin to rechallenge $40K resistance in the months ahead.
