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Bitcoin rally stokes $50k speculation over spot ETF anticipation

Brian McGleenon
Updated ·2-min read

Bitcoin (BTC-USD) surged by nearly 16% in the past week, surpassing the $44,000 (£35,000) mark on Wednesday, reaching a multi-year high.

Bitcoin was down 1.13% to $43,358.98 on Thursday.

Crypto derivatives traders are speculating on bitcoin's value appreciating in early 2024, according to Velo Data. The most traded group of options in the past 24 hours has been for calls at the strike price of $50,000 for the end of January expiry date.

Read more: Crypto live prices

A call gives a trader the right, but not the obligation, to buy the underlying asset at a specific price in the future. Traders purchasing the right to buy bitcoin at $50,000 in early 2024 suggests they expect the market price to rise above this level.

Anticipation of a spot bitcoin ETF approval rises

Investor anticipation of a spot bitcoin ETF approval by the US Securities Exchange Commission in early 2024 has contributed to bitcoin's recent price appreciation. Most analysts expect it could pave the way for a surge in institutional investment into the crypto sector.

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A bitcoin "halving" is also expected to occur in April 2024. This will slash the amount of new bitcoin being mined in half, reducing the supply of the digital asset. Assuming bitcoin demand increases, or stays steady, this is likely to send the digital asset's price up.

Read more: Bitcoin is up — and the zealots are back

Investors are also eyeing how central banks will adjust their monetary policy in 2024. US Federal Reserve officials are likely to pause interest rates at their next meeting on 13 December, according to the Chicago Mercantile Exchange's (CME) FedWatch tool. If rates are cut in 2024, it could make riskier asset classes like cryptocurrencies more appealing.

Influx of capital into the crypto market

There has been an influx of capital into the cryptocurrency market in the past week. The entire cryptocurrency market capitalisation was valued at $1.6tn on Thursday, according to Coingecko.

The total cryptocurrency trading volume also experienced an uptick, reaching $88.2bn.

The majority of the influx has been directed towards bitcoin, the largest cryptocurrency. Its market share expanded to stand at 51.3%, according to Coingecko data.

Watch: Institutional investment brings new momentum to the crypto-space | The Crypto Mile

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