Bitcoin has started the last month of the year on a bullish note as it surged past $41,000 over the weekend. Trading at a price level that has been the highest in 2023, the top cryptocurrency touched $41,700, which is also a first in 18 months.
In doing so, it rose to a level that was last seen in late April 2022, attracting much bullish sentiments for the coin. The broader cryptocurrency market also followed $BTC as a majority of the top coins moved up in price, taking the total capitalisation of the market to a high of $1.62 trillion, following a 4% daily change.
Commanding a market value of $815 billion, Bitcoin reflected a market dominance of over 50% at the time of press. Its Fear and Greed Index was also noted at 74, implying that the traders are in a mood to buy more.
What do the charts say?
The latest price action has put Bitcoin back on the track for a bullish trend after successfully clearing both the $38,500 and $39,500 resistance zones. By maintaining a strong momentum, the coin managed to surpass even its $41k price level.
Now, a close above the $41,500 resistance is expected to send the price further higher where the cryptocurrency would find its next key resistance around $42,000. Multiple support levels have also been created in this climb, in case a downward correction ensues, like the ones at $40,850, $40,000 and $39,700.
Things looked quite optimistic on the charts as well. The Moving Average Convergence/Divergence (MACD) went through a bullish crossover of lines, following which green histograms were seen on its chart. The Relative Strength Index (RSI) was also moving towards the overbought region, standing just below the 70 mark.
However, much price volatility could be expected as the Bollinger Bands were seen opening wider on Bitcoin’s chart.
What’s driving the rally?
A varied number of factors seemed to have triggered Bitcoin’s latest price action. A continued market anticipation for the approval of a Bitcoin spot exchange-traded fund (ETF) in the US was noted to be a key driver in the price surge.
Just last week, Bloomberg ETF analyst, James Seyffart, had predicted that an approval would come in early January: “Okay the window for potential spot Bitcoin ETF approval is looking like it’s gonna be between Jan 5 & Jan 10 2024.” Analysts here have continued to maintain their predictions of a 90% ETF approval probability for early next year.
Sunday afternoon also saw Gold’s value surging by 3.5% in just 30 minutes to a new all-time high. Known for having correlation with Bitcoin, market analysts believe Gold’s meteoric rise to signal deeper economic shifts that could have direct implications for Bitcoin as well.
Data has suggested how the liquidation of $65.15 million in Bitcoin short positions further propelled Bitcoin’s price. Here, a short squeeze, combined with strong spot demand, has been a key factor. The surge in price also caused a shake-up in the derivatives markets, leading to $190 million in liquidated positions, mostly from short positions.
Whales and institutional buyers seemed to have influenced the price too. Noting their impact, market analyst Skew said: “Someone is still aggressively chasing price here. More importantly if said large market entity actually allows some bids to get filled or not. If filled then expected for them to push the price higher. Clearly $40K is the price for institutional players”.
Trading tools provider, GreeksLive, also noted the broader market trend, stating, “Bitcoin broke through $41,000, Ethereum broke through $2,200. The giant whale once again showed a sense of smell before the market”.