A cursory look at the weekly Bitcoin chart shows the coin hitting its highest price in quite some time, specifically since May 2022. This rally is indicative of a gradual power grab by the bulls over the last few months; Bitcoin’s price broke the bear threshold and is poised to move higher for the first time in over a year.
Not too far back, in March, BTC broke through the $30k threshold with a solid bullish candle in the second week, and since then, prices have remained in a bullish consolidation. The bulls finally took over in October, sending BTC up to the $38,000 region for the first time in over a year. This reversal has been long overdue, after the painfully long, blistering crypto winter.
There are different reasons why BTC is looking bullish now, but chief among them is the push to launch Bitcoin ETFs. The crypto community is buzzing non-stop about Bitcoin ETFs with strong belief that their formal approval by regulators would increase adoption and increase BTC’s value.
ETFs are seen as the next stage of BTC adoption as formal approval would enable traditional investors in TradFi markets to gain direct exposure to Bitcoin. There are already speculations that at least $60 billion could flow into the Bitcoin market with the approval of ETFs.
TradFi institutional investors have shown interest in getting in on the crypto action is another factor. Numerous applications from various traditional fund managers, including BlackRock, Wisdom Tree Funds, Invesco, Galaxy Digital, Grayscale, and Valkyrie Funds, indicate a strong desire to gain exposure to Bitcoin.
October’s price surge was also fueled in part by Grayscale’s celebrated victory over the U.S. Securities and Exchange Commission (SEC) after the investment powerhouse sued the regulator for rejecting their Bitcoin ETF application.
Many investors are beginning to invest in BTC fueled by the hope that mega firms that have applied for ETFs would pump in substantial liquidity into the market.
What Makes Bitcoin ETFs Attractive to Big Institutional Investors?
Bitcoin has long been considered fool’s gold as it is not backed by any tangible asset. Even Berkshire Hathaway’s Warren Buffett described Bitcoin as a ‘gambling token.‘ But after BlackRock, the world’s largest asset manager, submitted a proposal for a Bitcoin exchange-traded fund (ETF) to the US Securities and Exchange Commission (SEC), many other big institutional funds and asset managers began to send in their applications.
While anyone can just call the news ‘bullish’ and buy some Bitcoin with hopes of higher prices when the ETFs get approved, it is also important to wonder what these corporate investors know about Bitcoin. Why is BlackRock, an asset manager overseeing around $9.4 trillion in assets, interested in Bitcoin?
None of these fund managers have explicitly given their reasons, but the obvious answer is that these large investment firms see Bitcoin as a new opportunity for profits through Exchange-Traded Funds (ETFs).
Traditional markets like stocks and bonds have become saturated, and fees for managing those funds have decreased. Cryptocurrency, especially Bitcoin, looks promising for generating revenue because of its significant interest and appeal to retail investors.
For example, Grayscale’s Bitcoin fund charges a 2% annual fee, and that translates to over $374 million in annual revenue for the firm. Even if BlackRock, with its $3 trillion in ETF assets, captures just 5% of the Bitcoin market with a 0.50% annual fee, it could mean an additional $150 million in revenue.
So if approved, though a significant change with cryptocurrencies being included in mainstream investment portfolios, a BlackRock Bitcoin ETF is an asset manager’s dream to tap into a new and hugely potentially lucrative market.
These large investment firms see crypto, especially Bitcoin, as providing untapped opportunities for growth and innovation beyond traditional assets. The appeal lies in the potential for increased revenue, diversification, and the ability to tap into the growing interest in digital assets.
What Are the Price Projections for Bitcoin After a Possible ETF Approval?
Bitcoin has posted seven green candles in quick succession on the weekly chart in 2023; this is the most bullish signal the asset has shown within the timeframe. Thanks in part to the speculations of ETF approvals. And if, in reality, the speculations materialize, the injection of substantial capital into the asset’s market market could be consequential.
In the long term, we anticipate BTC reaching its previous all-time high (ATH) of around $60,000. Our fib retracement aligns at 38.20% with the trendline (upper red line) and the diagonal dotted trend line. This long-term projection suggests that prices could range between $88,000 and $90,000.
The Bitcoin halving event coming up next year would impact these price projections and introduce some selling pressure. Investors whose entry to the market drove prices to the current zone may seek to capitalize on profits at higher levels. This could be at the $45,000 and $60,000 price points as indicated by the trend lines (red lines). These lines correspond to previous highs, serving as potential take-profit targets.
However, should the market fail to take off from this point (and, of course, a retracement will come), the price points might be between $30,000 – $31,000. A retracement could also create a short bounce at the $35,000 region. Another scenario involves a consolidation in that area as prices stabilize over the next few weeks. A price pump during Christmas to $43,335 would be a welcomed gift for Bitcoin enthusiasts and would likely amplify the ETF-related excitement.
Final Thoughts
Bitcoin exhibits a clear bullish trend in the charts. The excitement over the potential for regulatory clarity and an influx of billions of dollars from institutional investors fed off each other on the table of hype about the token. And until Bitcoin ETFs gain approval, the noise might only get louder.
Disclaimer: This piece is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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