Is $40,000 Next? Unpacking 4 Reasons Behind Bitcoin’s Emerging Rally
November 17 2023 - 1:00PM
NEWSBTC
The Bitcoin price rally is losing strength as the cryptocurrency
returns to its support levels following weeks of bullish momentum.
In the short term, the landscape seems sloped to the downside, but
an analyst presented the main reasons why the rally has just begun.
Related Reading: Ethereum Price Holds Ground – Indicators Suggest
Fresh Surge To $2,120 As of this writing, Bitcoin (BTC) trades at
$36,550 with a 2% loss in the last 24 hours. Over the previous
week, the cryptocurrency recorded similar losses following the
general sentiment in the market. Only Solana (SOL) preserved its
gains during the same period. Behind Bitcoin’s Surge: Decoding the
Four Key Factors According to a report from Deribit Insight, posted
by Markus Thielen, several forces are pushing Bitcoin towards new
yearly highs. These forces remain intact despite the recent price
action. Among the reasons behind the current BTC price rally, the
analyst included speculations around the U.S. Securities And
Exchange Commission (SEC) Bitcoin Exchange Traded Fund decision,
traders’ appetite for leverage, fiat inflows through stablecoins,
and increased fee generation within the Bitcoin network. SEC’s
Decision On The Bitcoin ETFs A significant driver is the
anticipation surrounding the SEC’s approval of a spot Bitcoin ETF.
Despite passing the second deadline in mid-October without any
announcement, the market remains watchful, with the third deadline
set for mid-January 2024. The uncertainty surrounding this decision
has led to fluctuations in implied volatility, influencing
Bitcoin’s value. Leveraged Positions and Futures Market The demand
for leveraged positions in Bitcoin, primarily through perpetual
futures markets, indicates a strong interest in trading the
BTC/USDT pair. This was evident when the funding premium reached an
annualized +28% on November 13. In addition, the BTC options market
saw an uptick in realized volatility. The increase in the metric
signals risk appetite for investors. The chart below shows that the
metric approaches its 5-year average. However, the analyst believes
that volatility should decline as the year ends, suggesting that
Bitcoin will follow a sideways trajectory in the short term. Influx
of Fiat Via Stablecoins Another crucial aspect is the substantial
fiat inflow into cryptocurrencies, mainly through Tether’s USDT,
indicating fresh capital entering the crypto space. With over $3.8
billion moving into crypto in the last 30 days, this influx has had
a notable impact, especially on altcoins, reflecting growing
investor confidence. Increased Bitcoin Network Activity The Bitcoin
network’s fee generation signals heightened activity, reaching $54
million. The report claims that this growth in network usage,
partly driven by the resurgence of Ordinals and support from major
exchanges, underscores the fundamental strength of the Bitcoin
ecosystem. Despite these positive indicators, the absence of an SEC
Bitcoin ETF approval and a reduction in leveraged long positions
might prevent Bitcoin from soaring past the $40,000 mark. However,
the ongoing solid fiat inflows and a robust, fee-generating Bitcoin
network provide grounds for cautious optimism. Related Reading:
Wall Street Expert Predicts Ripple IPO Date Bitcoin’s journey
remains captivating as it navigates regulatory decisions, market
strategies, and evolving investor sentiment. Cover image from
Unsplash, chart from Tradingview
Solana (COIN:SOLUSD)
Historical Stock Chart
From Jul 2024 to Aug 2024
Solana (COIN:SOLUSD)
Historical Stock Chart
From Aug 2023 to Aug 2024