It has been a long time since the prices of Bitcoin and other cryptocurrencies rose as significantly as in the past few days. On the surface, the reason was confusing news about a Bitcoin ETF. In fact, the market was simply ready for it.
This makes things fun! While the color red is known to trigger aggression and caution in the viewer, the color green awakens hope and creativity. So it’s much better for the psyche to look at green surfaces instead of red – or candles.
Rising prices are usually represented by green columns and falling prices by red columns, which are commonly called “candles”. And while the red candles have been few and far between in recent days and mostly fairly flat, there has been no shortage of magnificently towering green candles.
The prices rose. On Friday morning a Bitcoin cost 27,000 euros, today it is a good 32,000.
This increase of almost 20 percent extended throughout the entire ecosystem. Everything rose, albeit differently. Solana, Chainlink and Mina skyrocketed in the most extreme way.
Solana rose from around 23 to almost 32 euros – by almost a third – while Mina rose by more than 75 percent with a jump from 36 to 62 cents.
However, one has to admit that both Chainlink and Mina are both well below their all-time lows despite this upward sentence. At Mina this was more than 5 euros at the end of 2021, and at Solana at the same time it was around 216 euros. The price of both coins is not even a shadow of itself.
Ethereum has also risen, from just under 1,500 to around 1,700 euros. This means that Ethereum is still not worth even half of what it was at the end of 2021, but in the long term it looks much better than Solana or Chainlink.
However, compared to Bitcoin, Ethereum falls to a yearly low of 0.052 Bitcoin. In the summer it was 0.07 Bitcoin, at the end of 2021 it was 0.09, and once, in 2017, it was even more than 0.14.
Huh or hott – it doesn’t matter, the main thing is something with ETF
So much for the classification of what is happening on the markets. But the much more interesting question is: Why?
Fortunately, this time most observers agree: It’s up to the ETF. More precisely: ETF fantasies.
As reported, BlackRock, the world’s largest asset manager, has submitted an application for a physically backed Bitcoin ETF. The abbreviation “IBTC” for the Blackrock ETF recently appeared at the American central securities depository DTCC. The Bitcoin scene registered this almost immediately and euphorically, as the abbreviation was seen as a sign that the Securities and Exchange Commission (SEC) was about to approve the ETF.
Investors in the USA do not lack options for adding Bitcoins to their portfolio. You can store Bitcoins yourself or have them held by platforms like Coinbase. You can buy shares in Grayscale’s Bitcoin Trust, ETFs on futures, short-term futures on Bakkt or shares in Microstrategy, whose price has now synchronized with that of Bitcoin. Nevertheless, a real spot ETF like the one BlackRock is planning is considered a game changer. Not only because it would be the most convenient product for institutional investors, be they banks, insurance companies or pension funds, but also because it reflects the price by accumulating Bitcoins purchased on exchanges.
The DTCC took advantage of the short period of attention from the Bitcoin community to cause maximum confusion. She quickly withdrew the abbreviation, only to list it again a little later. Why remains a mystery and subject to vague speculation.
But something is also happening outside of Blackrock when it comes to ETFs. For example, a court has declared the SEC’s rejection of a Bitcoin ETF from Grayscale, the publisher of the long-standing Bitcoin Trust on Second Market, invalid. Converting the trust into an ETF is a long-held wish of Grayscale and its investors. According to the judges, the supervisory authority should have approved the ETF because it had also approved a future ETF.
These events show, analysts are sure, that a Bitcoin spot ETF will be inevitable, whether today, tomorrow or the day after. The pressure on the SEC to change its negative stance is increasing. This growing confidence is fueling old fantasies of what such an ETF can trigger.
Last Thursday, the Galaxy Digital fund published a report according to which an ETF can pump $14.4 billion into the ecosystem in the first year, which could rise to $27 billion in the second year and to $39 billion in the third. In the first year alone, this could cause the Bitcoin price to rise by 74 percent. And the first year of the ETF, probably 2024 – that would also be the year in which the next halfening takes place, traditionally a strong driver of the price. So two bullish events are coming together that may reinforce each other and become more than the sum of their parts.
So nothing has changed materially. The alleged approval of an ETF was a canard, and is just as likely or unlikely to happen as it was a week ago. But the market’s imagination drove the price up 20 percent without letting it fall again after the news was exposed as a fake. Dreams are stronger than reality.
This makes one conclusion very likely: the price shot up because the market wanted it that way. He was just waiting for an opportunity like the one that gave him the approval of the ETF. It simply doesn’t matter whether it’s truth or fiction.