All eyes back on Bitcoin and Ethereum: What will drive the next crypto bull run?
Bitcoin (BTC), the largest cryptocurrency globally in terms of market capitalisation, started an upward trajectory during the last week of October and has kept on going. After 'Uptober', it looks like BTC is finally breaking free from its summer stagnation that kept the price around $26,000. Recently, it surpassed $36,000, reaching its highest point since May 2022. With the 20-, 50-, 100-, and 200-week simple moving averages for BTC's price all clustered around the $30,000 mark, it could be a sign that the crypto winter is defrosting and the crypto market is about to spring to new heights.
The surge in Bitcoin's value begs the question: What exactly is driving this appreciation, and how can traders take advantage of it?
Some observers attribute it to indications that US regulators may soon approve a set of BTC-based exchange-traded funds (ETFs) commonly known as spot Bitcoin ETFs. The potential approval of these ETFs could offer investors more options for Bitcoin exposure, potentially drawing in those who had been observing from the sidelines.
Another widely discussed theory ties Bitcoin's positive momentum to the upcoming 'halving', or 'halvening' in crypto community slang. This programmed adjustment to the blockchain involves halving the reward miners receive for processing transactions and generating new bitcoins, reducing it from 6.25 to 3.125 bitcoins per block. The halving occurs after every 210,000 blocks, approximately every four years, until the maximum supply of 21 million is reached. Bitcoin's fourth halving is anticipated to take place around mid-April 2024.
Historically, the inevitable reduction in supply that comes with this event has driven substantial increases in Bitcoin's price and could potentially lead to heightened volatility both before and after the halving event. Some experienced Bitcoin investors are already making impressive predictions in the lead-up to 2024. Speaking at the 2023 Australia Crypto Convention on 10 November, MicroStrategy co-founder Michael Saylor stressed that demand for Bitcoin will significantly ramp up following the halving next year, even growing by 10x in the next 12 months. Aside from the halving event, Saylor also emphasised that Bitcoin was on the verge of becoming a 'mainstream app' adopted by global finance institutions. The approval of spot ETFs will no doubt be a strong indicator of this mainstreaming process.
Deadline for Bitcoin spot ETF approval looms
So, how close are we to Bitcoin spot ETFs becoming a reality? Bloomberg analysts have reportedly estimated a 90% chance that a spot Bitcoin ETF will be approved by 10 January next year, but we might not have to wait that long. All 12 pending spot Bitcoin exchange-traded fund (ETF) applications in the United States Securities and Exchange Commission (SEC) pipeline could potentially receive approval by 17 November. From 9 November onward, the SEC reportedly has a 'window' of one week to greenlight these applications, including Grayscale Investments' conversion of its Grayscale Bitcoin Trust product.
However, don't get excited for BTC spot ETFs this week. Despite the possibility of the SEC approving spot Bitcoin ETFs by 17 November, the actual launch of these products might be delayed by more than a month. This delay is anticipated due to the two-step process involved in launching an ETF. To kickstart a Bitcoin ETF, an issuer needs approval from both the SEC's Trading and Markets division for its 19b-4 filing and the Corporate Finance division for its S-1 filing or prospectus. Among the 12 Bitcoin ETF applications, nine issuers have submitted revised prospectuses, indicating that they are in active communication with the Corporate Finance division.
Ethereum spot ETF filings spark ETH surge
One indication of the impact of Bitcoin spot ETFs, albeit on a smaller scale, can be seen in recent developments via similar financial instruments approved for Ethereum (ETH). On 9 November, investment firm BlackRock's intention to introduce a spot Ether exchange-traded fund (ETF) was formalised through a 19b-4 form filing submitted to the SEC. Following this confirmation, Ethereum experienced a notable surge of 12.2%, marking the first time in months that it outperformed Bitcoin.
BlackRock's potential entry into the Ethereum market can be taken as a sign of growing interest among institutional investors in the cryptocurrency sphere. The participation of institutional players could result in a substantial infusion of capital into the crypto market, contributing to a further increase in prices.
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As the crypto market begins to heat up and price action becomes more volatile, it's the perfect time to stake your claim in the cryptocurrency market so that you don't get left behind in 2024. If you haven't joined the StormGain community yet, sign up in just a few seconds and explore what StormGain has to offer by trying a demo account today!