Bitcoin Experiences Unanticipated Boom in 2020
Bitcoin’s value has experienced a remarkable resurgence this year, more than doubling in comparison to its tumultuous 2022. This unexpected turnaround has defied skeptics who had predicted the downfall of digital assets.
The largest cryptocurrency by market capitalization rose for a third day, pushing the price back to about $35,000, the highest level in about 18 months. Bitcoin fell 64% last year amid industry scandals and bankruptcies. It reached a record close to $69,000 in late 2021.
Growing expectations that the U.S. Securities and Exchange Commission will allow exchange-traded funds to invest directly in the cryptocurrency after a decade of deliberation fueled a more than 25 percent rally in the past two weeks.
“Sentiment is clearly bullish as more signs begin to reveal a likely, imminent listing for a Bitcoin ETF in the US,” said Darius Tabatabai, founder of decentralized exchange Vertex Protoco.
On Monday, a federal appeals court upheld Grayscale Investments LLC’s victory in its bid to create a Bitcoin-based ETF. Last week, Bitcoin briefly surged 10%, its highest price since August, after a false report that BlackRock Inc. had won SEC approval for the ETF.
Tabatabai added that the exchange saw a new all-time record for shorts liquidation in the past 24 hours, and one of the most volume days ever.
“The bulls came back in a big way and brought some much-needed optimism in what has been a fairly gloomy market for quite some time,” Tabatabai said.
Matthew J. Maley, chief market strategist at Miller Tabak Co., LLC, said geopolitical tensions are also contributing to the rally.
“I think investors are thinking that the proliferation of geopolitical hotspots in the world is increasing the likelihood that crypto will become a major currency sooner than they previously thought,” Maley said.
The three-day rally is the biggest since March. After the collapse of Silicon Valley Bank on March 10, Bitcoin rallied for four consecutive days, rising above $26,000 for the first time since June of last year.
Read more: Bitcoin tops $26,000 on buoyant sentiment after US banking action
While Bitcoin prices may experience a short-term price drop, the currency is poised to continue its upward trend in the long term, according to James Butterfill, director of research at CoinShares.
“Prior to the ETF hype, the price of Bitcoin closely reflected the expected likelihood of a December rate hike,” Butterfill said. “As these odds diminish in light of rising Treasury yields, it looks like it could further support prices and form Bitcoin’s next bull market in the longer term.”
