On January 2nd, Bitcoin surged to fresh 21-month highs, igniting excitement in the Asian trading session.
Data from Cointelegraph Markets Pro and TradingView indicated that Bitcoin’s price momentum was gaining strength after the holiday season.
The primary catalyst for this surge was the renewed enthusiasm surrounding the United States’ first spot Bitcoin exchange-traded fund (ETF). BTC/USD gained momentum, reaching $45,922 on Bitstamp.
Speculation regarding the ETF was rampant, with rumors suggesting a potential decision might come ahead of the official approval window scheduled for January 4th.
Market participants were unanimous in attributing the recent upward movement in Bitcoin’s price to anticipation of the ETF’s approval.
Crypto analyst Tony, in an update to subscribers on X (formerly Twitter), described this anticipation as a driving force.
Trader and podcast host Scott Melker summarized, “Bitcoin is trading as if an ETF is on the verge of being approved.”
Analyzing changes in the order book, fellow trader Skew observed some selling activity, although the volume remained relatively low.
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He confirmed in his latest X post that the price had stalled since spot selling began and highlighted the importance of previous highs as a key level to watch on a potential dip, specifically at $44.4K.
Estimates for Bitcoin’s potential price with the ETF focus centered around $48,000, despite the cryptocurrency already gaining up to 8% in the early days of 2024.
Interestingly, Bitcoin did not experience significant losses from traders betting against it. CoinGlass data indicated that only $38 million in Bitcoin shorts had been liquidated at the time of writing.
Previously, high funding rates across exchanges hinted at a widespread belief that the ETF event would trigger an upside move.
Cross-crypto short liquidations stood at $62 million. Skew pointed out that earlier short positions were caught off guard during the move past $45,000, particularly in the perpetual swap market.
This underexposure of the perpetual market to the current spot-driven surge suggested the potential for a feedback loop of volatility, especially around the $45,000 price level.
In summary, Bitcoin’s recent rally to 21-month highs was driven by excitement over the potential approval of the first U.S. spot Bitcoin ETF.
Traders and analysts closely monitored the market, with many anticipating further price gains and potential turbulence as the ETF decision date approached.
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