Bitcoin (BTC) price is up today, rebounding from the Nov. 28 correction below $37,000 and hitting an intra-day high of $38,274. The rally comes as traders’ bullish bias for Bitcoin price continues to firm up. After traders digested the Binance settlement, the hype around the markets’ belief that a spot BTC exchange-traded fund (ETF) would be approved and bring significant cash inflows to Bitcoin, pushing prices across the crypto market higher.
Let’s look into the reasons why Bitcoin price is up today.
The Binance dust begins to settle
Initially, Bitcoin price flashed mixed signals after Changpeng “CZ” Zhao’s guilty plea and the DOJ’s $4.3 billion settlement with Binance. After taking some time to digest the outcome, the market began to notice the Binance exchange was not having a mass exodus of funds like FTX did when its liquidity crisis first became public.
While initially, Binance’s Bitcoin reserves were down 17% from their all-time high, the exchange is starting to see BTC inflows again. Since the initial outflows, Binance’s Bitcoin balance is up nearly 1%. By comparison, FTX BTC reserves were depleted by 99.9% from the all-time high when the exchange experienced a run on the bank in November 2022 and never recovered.
While Binance’s Bitcoin reserves are their lowest since 2017, they maintain the largest amount of BTC compared to other centralized exchanges.
Markus Levin co-founder of XYO Network, noticed that after the Binance settlement,
“The sustained uptrend for Bitcoin and much of the rest of the digital asset market is demonstrably clear. The pullbacks for BTC are not as pronounced as many have expected, suggesting that there is strong accumulation happening.”
Potential spot BTC ETF approval boosts market sentiment
Despite a bevy of macro headwinds, Bitcoin price continues to push higher, achieving a 130.5% year-to-date gain with volatility increasing. Some Bitcoin analysts believe the Binance and DOJ settlement is bullish for spot Bitcoin ETF approval, noting a similar deal achieved by Arthur Hayes and BitMEX.
Taking the positive sentiment further, some believe the Binance settlement is positive for the entire crypto market, marking the end of the Wild West era. While Bitcoin market sentiment may be below last month’s levels, it remains firmly in greed, reflecting sustained strength.
Bitcoin hedge fund, Capriole sees the increased sentiment reflecting on price by noting that a,
“High-timeframe technical bias is bullish towards range high ($58K). On Daily timeframes, $42-45K remains the near-term Wyckoff target.”
After a rush of spot Bitcoin ETF amendments in mid-October, the Securities and Exchange Commission (SEC) has refused to approve a spot Bitcoin ETF despite numerous applicants, including BlackRock, Fidelity, ARK Invest and 21Shares.
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The SEC delayed approvals on a Nov. 17 deadline, the SEC’s next deadline is Jan. 10. Both Grayscale and BlackRock executives met with the SEC on Nov. 20 to discuss spot Bitcoin ETF approval.
According to reports, an approval may generate $600 billion in new demand. CryptoQuant analysts believe that an ETF approval will lead to a $1 trillion increase in Bitcoin’s market capitalization.
Galaxy Digital predicts a 74% price increase in the first year after a spot BTC ETF launch.
Record weekly inflows as year-to-date total surpasses $1.5 billion
While some investors may be awaiting increased liquidity from approved ETFs, institutional investors have already begun deploying funds to Bitcoin and crypto. According to CoinShares, institutional investors have pushed more than $1.5 billion into crypto in the past year.
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Of the $1.66 billion pushed to crypto assets last year, over $1.5 billion has flowed to Bitcoin specifically. In the past week, $311 million of institutional inflow was for Bitcoin alone. The total weekly inflows into crypto by institutional investors of $346 million is the most since November 2021.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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