Bitcoin Hits $40,000 for the First Time in This Bullish Cycle

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Some called it a well-disguised bull trap. Others called it a mirage. But Bitcoin has proven its detractors wrong for the umpteenth time this bull cycle, having scaled past the psychologically important $40,000 price level just moments ago.


Bitcoin’s price movement over the past 7 days.

As is evident from the above chart, Bitcoin just created a new cycle high by hitting the $40,076 price level moments ago. The world’s preeminent cryptocurrency is up 14 percent over the past month and a whopping 140 percent since the start of 2023.

Bitcoin has seen accelerated inflows over the past few weeks as the SEC seems to be drawing ever closer to greenlighting some of the first spot Bitcoin ETFs in the US. Bloomberg’s James Seyffart continues to believe that at least one spot Bitcoin ETF application will win formal approval from the SEC by January 2024, with Blackrock and Grayscale currently the clear favorites in this race.

A spot Bitcoin ETF would, in theory, make it extremely convenient for investors to acquire exposure to Bitcoin without the various pitfalls associated with futures-based ETFs, which include roll-over losses in contracts that are usually in contango – a typical situation where contracts for the months ahead are usually priced at a premium to the spot price, leading to progressively expensive roll-overs as the front-month contract expires and the next one takes its place. Over time, should contango persist, this mechanism leads to higher costs and ETF underperformance relative to the spot price. Due to this phenomenon, the futures-based Bitcoin investment avenues are not conducive to large-scale institutional adoption.

K33 Research recently estimated that the launch of spot Bitcoin ETFs could attract around 100,000 BTC in institutional investments. Meanwhile, MicroStrategy’s Michael Saylor keeps adding to its gargantuan Bitcoin stash in anticipation of rip-roaring gains ahead.

Of course, with the courts recently pushing back against the SEC’s broad-based witchhunt against the crypto sector, imbuing some much-needed regulatory certainty in the process, institutional investors feel much more confident now in deploying capital within this nascent sector. Concurrently, with much of the excesses of the last bull cycle now erased by the exigencies of the recent bearish phase, one that had plunged Bitcoin’s price to as low as ~$16,000 toward the end of 2022 and eviscerated several crypto intermediaries, including Terra and FTX, the relatively clear path forward is only enhancing the appeal of the world’s preeminent cryptocurrency.

The biggest stimulus for Bitcoin, however, remains its upcoming halving event in April 2024, when the cryptocurrency’s mining reward is slated to be cut in half in a repetitive 4-year cycle, one that is expected to unleash a robust disinflationary wave, boosting Bitcoin’s price in the process.

On a final note, Bitcoin seems to have established a robust support zone in the $30,000 to $35,000 price area. This new floor of sorts bodes well for the cryptocurrency’s near-term prospects, defined by conducive intrinsic and extrinsic factors, including the Federal Reserve’s recent benign tilt in the face of the ongoing disinflationary trend in the US, which has boosted expectations of interest rate cuts in Q1 2024.

Update: Bitcoin Hits $42,000 Price Level

Bitcoin appears to be in no rush to consolidate after zipping past the psychologically important $40,000 price level. The world’s preeminent cryptocurrency has now tagged the $42,000 level.

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