Bitcoin (BTC) price is up today, topping $39,000 for the first time in over a year. The rally comes as traders’ bullish bias for Bitcoin produced the best November performance since 2020. 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.
Now that BTC has notched the best monthly close in 19-months, let’s look into the reasons why Bitcoin price is up today.
Dust from the Binance saga begins to settle
Initially, Bitcoin price flashed mixed signals after former Binance CEO Changpeng “CZ” Zhao’s guilty plea and the the exchange agreed to pay a $4.3 billion settlement to the U.S. Department of Justice (DOJ) on Nov. 21. After taking some time to digest the outcome, the market began to notice that Binance exchange was not having a mass exodus of funds like FTX did when its liquidity crisis first became public. Leaders in the crypto market like Galaxy Digital CEO Mike Novogratz see the settlement as a net positive overall.
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. Research for on-chain analytics firm Nansen concluded that it is back to normal business for the largest crypto exchange, Binance.
While Binance’s Bitcoin reserves are their lowest since March 15, they maintain the largest amount of BTC compared to other centralized exchanges.
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. U.S. liquidity is beginning to mirror the start of previous Bitcoin bull runs due to quantitative easing measures.
US Liquidity is trending up strongly, much like it did at the start of all prior Bitcoin bull runs.
The relationship between US Liquidity and Bitcoin’s price is incredible. QE = number go up. QT = number go down.
— Charles Edwards (@caprioleio) December 1, 2023
The current positive sentiment around Bitcoin led MicroStrategy to buy another $600 million in BTC on Nov. 30. 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.
Galaxy Digital predicts a 74% price increase in the first year after a spot BTC ETF launch. The next window for the SEC to potentially approve a spot Bitcoin ETF is Jan. 5 through 10.
— Scott Johnsson (@SGJohnsson) December 1, 2023
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.
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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