Cryptocurrency

Bitcoin has kicked off 2024 on a high note, surging by about 9% to reach $45,925, marking its highest value since April 2022. This surge is attributed to a combination of factors involving its on-chain activity, fundamental indicators, and technical analysis.

The current price uptick comes just ahead of the U.S. Securities and Exchange Commission’s (SEC) deliberation on several spot Bitcoin ETF applications, expected before the official approval window opens on January 4.

Notably, data from CME Bitcoin futures highlights investors’ optimism regarding higher BTC prices. These futures are currently trading at an approximate premium of $1,300 above the cryptocurrency’s spot value, signaling a belief among futures traders in a potential rise in Bitcoin’s value following the anticipated approval of a Bitcoin ETF.

This scenario, known as “contango,” implies that futures traders are anticipating increased demand for BTC, likely influenced by the expected ETF approval. Traders are speculating that the spot price will eventually match or surpass the futures price in the coming days or weeks.

Furthermore, there’s a noticeable trend in Bitcoin’s net flows, indicating negative net flows today. In the realm of spot exchanges, a decrease in net flow typically suggests growing buying pressure, suggesting traders are withdrawing funds from exchanges for longer-term holding.

This trend aligns with a broader pattern observed since June, coinciding with BlackRock’s filing for a spot Bitcoin ETF, showcasing diminishing balances across various crypto exchanges. This trend hints at traders’ expectations of higher prices in anticipation of the SEC’s ETF decision and possibly the 2024 Bitcoin halving.

Today’s price surge in Bitcoin is part of an ascending triangle pattern, a setup in an upward market trend. Typically, these triangles conclude with a decisive price breakout above their upper trendlines, potentially propelling the price to reach heights equal to the triangle’s maximum.

As of January 2, Bitcoin’s price had entered the breakout stage of this ascending triangle pattern, setting its sights on the primary breakout target just under the $50,000 mark.

Bitcoin surged to its highest levels since April 2022, triggering a wave of excitement in the Asia trading session. However, those betting against it are bracing themselves for potential volatility linked to the forthcoming ETF.

The excitement around the United States’ first spot Bitcoin exchange-traded fund (ETF) fueled Bitcoin’s upward momentum, propelling it to reach $45,922 on Bitstamp.

Speculation and rumors abound regarding the ETF, with talks hinting at a potential decision even before the official approval window opens on January 4.

Traders unanimously attribute the recent surge in Bitcoin’s price to the anticipation of the ETF approval. Analysts and traders, like Crypto Tony and Scott Melker, observe the market behaving as if an ETF approval is imminent.

While some selling activity was detected in the order book, the volume remained relatively subdued. Traders are eyeing previous highs, around $44.4K, as a crucial level in case of a dip.

Estimates suggest Bitcoin could potentially reach $48,000, especially amidst ETF speculation.

Despite Bitcoin gaining around 8% in 2024, short positions haven’t suffered significant losses. The data indicates only $38 million in BTC shorts got liquidated, highlighting the resilience of those betting against Bitcoin.

While funding rates hinted at optimism about the ETF’s positive impact, some traders were caught off guard by Bitcoin surpassing $45,000. Perpetual swap traders seemed unprepared for this upward movement, creating potential volatility around the $45K mark.

In essence, the market is witnessing a dynamic interplay between spot Bitcoin price movements and derivatives, setting the stage for potential volatility, particularly around the $45,000 threshold.