Why Is Bitcoin Price Is Going Up Today?

As the year 2023 comes to end, Bitcoin price is following an uptrend, recording an yearly rise of over 140%, monthly gains of 19%, and weekly gains of 11%. Bitcoin’s price has surpassed the $41,500 mark after almost one and a half years, leading investors to anticipate a bull market in the early 2024.

Bitcoin’s price is continually on the rise for the entire month of November, 2023, caused by one after the other positive market news in the industry. Let us delve deep into the crypto market performance and understand why Bitcoin price is up today.

Potential for Bitcoin Spot ETFs Approval

The entire market is eagerly waiting for the approval of Bitcoin spot ETFs in the early 2024. The high possibility of Bitcoin spot ETF approvals is the major reason behind investors flocking to Bitcoin.

Bloomberg analyst James Seyffart posted on X stating that the SEC narrowed the timeline to the upcoming Jan 5 – Jan 10 to announce if it’s going to approve or reject all the 13 BTC spot ETFs.

Seyffart’s analysis suggests that there is a strong likelihood of 90% for the Bitcoin spot ETFs to be approved by the SEC. Around 12 Bitcoin spot ETFs by major organizations like Ark Investments and Black Rock are to be finalized by the SEC.

Several market reports estimate a significant price rise in Bitcoin once the ETFs are approved. Galaxy published a research report predicting that the BTC spot ETF approvals can push Bitcoin’s price by more than 74%.

Stagnant FED Interest Rate Hikes

A series of rising interest rate hikes by FED occurred for the entire year of 2022. The unstable economic conditions in the US and the rising inflation were the primary reasons for increased interest rate hikes. This caused investors to step back from investing in the crypto market.

Federal Reserve Chairman Jereme Powell stated that there won’t be any future rate hikes on December 1, 2023. This is a huge relief for the crypto market and Bitcoin. The inflation is gradually decreasing, demonstrating a recovery in the global market conditions.

However, Jerome Powell also stated that we cannot yet conclude that interest rate hikes are no more needed. He further added that more hikes could happen in the future keeping the US economic condition in mind.

If we keep the possibility of future interest rate hikes, the present announcement brought some positive sentiment to the crypto market. And, it served as one of the major reasons for the Bitcoin price rally.

Upcoming Bitcoin Halving Event

Historically, each Bitcoin halving event has resulted in an upward price movementum of Bitcoin. Bitcoin halving is an event that was predefined when the Bitcoin blockchain was created in 2009. It reduced the Bitcoin block reward by half and adjusts the mining difficulty. 

The first Bitcoin halving was occurred on November 28, 2012 and it reduced block reward from 50 Bitcoions to 25 Bitcoins. The second Bitcoin halving event happened on July 9, 2016, further reducing the block reward to 12.5 BTC. After that the last Bitcoin halving event occurred on May 11, 2020 and reduced the block reward to 6.25 BTC. 

Everytime, the Bitcoin halving occurred, it considerably increased the price of Bitcoin. The next halving event is estimated to happen on May 11, 2024 and is about to reduce the block reward to 3.125 BTC. 

If the previous pattern continues this time as well, the Bitcoin price will definitely increase and can even bring back the bull market if the other market conditions are also favoarble. The upcoming Bitcoin halving is also one of the primary reasons for increased investments in Bitcoin. And, it is also causing the Bitcoin price to increase. 

Substantial Weekly Inflows

Several institutional investors already started pouring funds into the crypto market. This has also caused an increasing investor sentiment which is further pushing Bitcoin’s price.

As per Volume 157: Digital Asset Fund Flows Weekly Report by CoinShares, digital asset ETP inflows crossed $1 billion mark in 2023. Among the $1 billion worth ETP inflows, around $293 million inflows were recorded in the second week of November 2023. And, Bitcoin ETPs makes up 19.5% of the total Bitcoin trading volumes. This implies increased participation of ETP invetsors this year compred to previous years.

Coming to the Bitcoin inflows, it already crossed $1.08 billion this year. On the other hand, Ethereum wtnessed largest inflows of $49 million since August 2022. The increasing instututional investment in Bitcoin has brought a singificant price rise previously, which is repeating this time as well.

Binance’s Settlement and Indifference In Its Bitcoin Reserves

The leading crypto exchange platform Binance faced a turmoil when the Deprtment of Justice (DoJ) sanctioned it on November 21, 2023. The DoJ alleged Binance stating the exchange platform was not in compliant with the Anti-Money Laundering (AML) laws. 

As a result, Changpeng Zhao resigned and stepped down as CEO after entering a personal guilty plea in the US. Adding to that, the exchange also agreed to pay more than $4 billion as part of the settlement. 

It didn’t take much time for the industry to realize this is not going to impact the market like the FTX crash did. Binance and its former CEO Changpeng Zhao handled the situation well and settled it without causing negative effects to the exchange funds and users’ funds. 

BTC reserves of the FTX collapsed by more than 99% from its all-time high when the FTX exchange crashed. When it comes to Binance, its BTC reserves were only down by around 17% from their all-time high. Being the largest crypto exchange, the indifference in Binance’s Bitcoin reserves boosted the confidence of investors to continue invest in Bitcoin. 

Conclusion

Bitcoin price is increasing substantially this year and the factors like upcoming Bitcoin halving event and the potential for BTC spot ETF approvals are the major reasons behind it.

The investor sentiment has also turned from fear to greed, demonstrating that investors are confident in pouring their funds into Bitcoin. Can this bring back the bull market and push Bitcoin’s price to reach a new all-time high?