Bitcoin has recently surged past the $44,000 mark, experiencing a remarkable 25% gain in just a week. This surge adds to the impressive performance of the cryptocurrency, which has seen a 158% rise compared to its levels a year ago, according to data from CoinMarketCap. Amidst a volatile crypto market, what factors are driving Bitcoin’s price ascent, and can this positive momentum continue in the new year?
Bitcoin’s surge past $44,000 can be attributed to multiple factors, including the anticipation of a spot Bitcoin ETF approval and the expected institutional and mainstream adoption of the cryptocurrency in 2024. While the approval of a Bitcoin ETF could potentially attract more capital and drive Bitcoin’s value higher, the market’s response remains to be seen. With increasing trading volume and growing investor interest, Bitcoin’s positive momentum seems poised to continue into the new year.
Spot Bitcoin ETF Approval as a Catalyst
According to Tegan Kline, CEO of Edge & Node, the primary driving force behind the recent surge in Bitcoin’s price is the anticipated approval of the spot Bitcoin exchange-traded fund (ETF). She believes that once the ETF is live, there will be additional capital flows into the cryptocurrency, further boosting its value.
This sentiment is echoed by Luke Nolan, a research associate at CoinShares, who attributes the start of this Bitcoin rally to the mid-October ruling by the D.C. Circuit Court of Appeals. The ruling closed the legal battle between the Securities and Exchange Commission (SEC) and digital asset manager Grayscale over the Bitcoin spot ETF application. The court’s final ruling ordered the SEC to reverse its rejection of the application.
Nolan explains that the market response to this ruling has been tremendous, with investors buying in anticipation of significant flows resulting from potential ETF launches. Moreover, if the SEC approves a spot Bitcoin ETF, it would provide a “stamp of approval” for the asset class from the world’s largest capital market regulator. This approval could attract more capital inflows into Bitcoin, potentially driving its value even higher.
Institutional and Mainstream Adoption on the Horizon
In addition to the ETF excitement, Bitcoin’s price surge has been fueled by the anticipation of widespread institutional and mainstream adoption in 2024. Joel Kruger, LMAX Group currency strategist, highlights that channels are being opened up to facilitate easier access to Bitcoin exposure. This development is expected to contribute significantly to the cryptocurrency’s growth and value.
It’s worth noting that Bitcoin’s recent surge into year-end has been accompanied by the highest trading volume since November 2022. This boost in trading activity further validates the positive market sentiment surrounding Bitcoin and indicates a growing investor interest in the cryptocurrency.