Cryptocurrencies experienced a volatile week as the speculation surrounding the approval of Bitcoin Exchange-Traded Funds (ETFs) dominated the market. Bitcoin had a strong start to the year, reaching a 21-month high of $45,532, but quickly dropped to $40,813 the next day. Currently, it is trading at $43,946.33 according to CoinMarketCap.
Ethereum, the second largest cryptocurrency, also saw a similar trend. It reached $2,400 on January 2, but fell to $2,181 the following day. As of Friday, it is trading at $2,258.88, with a 3.35% decrease in the last seven days.
According to Parth Chaturvedi, investments lead at CoinSwitch Ventures, the sell-off on January 3 was due to a report by an analyst from MatrixPort stating that the approval of ETFs would be further delayed until June.
“The price of Bitcoin saw a resurgence to $44,000 in the last 24 hours, triggered by reports of the SEC’s final comments to issuers, hinting at potential approval for Bitcoin spot ETFs. This recovery came after a crash on Wednesday, bringing back optimism among market participants,” said Edul Patel, CEO of Mudrex.
Chaturvedi also added that the markets stabilized after digesting the report, and saw a recovery despite the ongoing speculation about the approval of spot Bitcoin ETFs.
Experts, however, remain optimistic about the chances of ETF approval. According to Bloomberg, the chances are as high as 90%.
“Even JP Morgan, whose CEO had previously criticized Bitcoin, has been named as an authorized participant for Blackrock’s application,” added Chaturvedi.
Another significant development during the week was the Centre’s issuance of compliance show cause notices to nine offshore cryptocurrency exchanges, including Binance, Kucoin, and Huobi. These notices were issued by India’s Financial Intelligence Unit (FIU), under the Ministry of Finance, and the IT ministry was asked to restrict the websites of these companies. However, it did not have a major impact on the prices of cryptocurrencies.
According to CoinDCX’s research team, Bitcoin needs to sustain the $44,000 level to establish a positive momentum. “For Ethereum to initiate a positive trend, it needs to reclaim levels above $2,380,” they added.
Patel also noted that if the $43,900 level is established as a support level, it may signal an uptrend upon closing above it.
This article was first published on Jan 05 2024 at 2:26 PM IST and was last updated on Jan 05 2024 at 2:26 PM IST.
