Drafting Bitsur.

Bitcoin, the best-known cryptocurrency in the market, rose last Wednesday, October 6, around 6% and stood near $ 54,300, a level that had not reached since May 13, 2021. The digital currency has been revalued since last Friday, October 8, after the president of the United States Federal Reserve (Fed), Jerome Powell, assured that he does not plan to prohibit this type of digital assets. However, its bullish path is based on some important points.

Before going on to analyze the reasons why Bitcoin rose considerably, it should be noted that September was a negative month for the markets and that of cryptocurrencies was no exception. In this sense, the price of bitcoin fell more than 7% in that month after two months of double-digit gains. Its behavior was similar to that of the capital market.

Among the reasons for this phenomenon is the strengthening of the dollar caused by the fear that stimuli from the United States Federal Reserve will be withdrawn early and its rates will rise in response to persistent inflation. The advance of the greenback to a maximum of one year was joined by the ban in China.

Now, October started in a positive way. What caused this rebound?

A number of factors have lined up in favor of bitcoin. On the one hand, China’s latest crackdown on cryptocurrency transactions, which had caused a drop last month, has been tempered by more encouraging news: a Bank of America report calling the asset class too big to ignored by investors and optimism about the launch of US Bancorp’s bitcoin custody services. to institutional investors.

Another point to look at, in the context of inflation, is that bitcoin is said to act as a good hedge amid rising prices for everything from energy to cotton to food. Analysts at JPMorgan Chase & Co., in a recent report, said that there are now tentative signs that the shift from gold to bitcoin, something that was also observed during the fourth quarter of 2020 and early 2021, has started to resurface in The last weeks. This cryptocurrency is 18% away from reaching the level of the historical maximum of USD 64,600, which it achieved on April 14.

Similarly, another reason pointed out by JPMorgan as a driver of the bitcoin price is the recent rise of the second layer of bitcoin payments network, Lightning Network, due to the adoption of bitcoin in El Salvador. On September 26, the president of that Central American country, Nayib Bukele, reported that more than 3 million Salvadorans were using the Chivo purse, which represents almost 30% of the population.

On the other hand, aggregate open interest in bitcoin options and futures on major exchanges has also risen, up 21% in the past seven days, according to data from ViewBase, a digital asset analytics company. Coupled with rising prices, this could indicate that investors are leveraging themselves and betting that prices could continue to rise, according to the study.

More expectation about the price of BTC

The first of a series of decisions by the United States Securities and Exchange Commission (SEC) on some twenty requests for bitcoin exchange-traded funds (ETFs) introduced this year is expected soon. According to bitcoin market analysts, there are strong expectations of approval of one or more ETFs, within the SEC announcements, expected from Monday, October 18.

According to a report by Arcane Research, if a futures-based ETF receives approval, it would cause greater buying pressure on CME, the specialized futures exchange, which would drive the growth of open interest in futures in the medium term.

In the long term, having a positive verdict from the SEC, ETFs become another investment vehicle in bitcoin. As they raise capital, ETFs can be important to bitcoin price action, but their longer-term influence becomes less important, according to the report.

Between October 18 and November 3, six decisions on bitcoin futures ETFs will be announced, while from next November 14, the SEC’s opinions on 12 physical, or spot, bitcoin ETFs will be communicated.

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