Bitcoin Surges in 2023, Tops $35,000
Bitcoin’s price recently surpassed $35,000, marking a significant milestone. This is the first time it has reached such heights since May 2022. Several factors have contributed to this price surge, including positive sentiment surrounding a potential bitcoin exchange-traded fund (ETF) and a flight to safety that triggered a rise in short liquidations.
As of Tuesday, Bitcoin was trading at over $34,000, a remarkable increase of more than 10% from previous levels, according to data from Coin Metrics. Late on Monday night, it briefly peaked at $35,113.29, a level not seen since May 8, 2022. What’s even more impressive is that Bitcoin has increased by nearly 110% compared to the beginning of the year and its lowest point in 2022.
One key factor behind this rally is a short squeeze, which occurs when investors who had bet against Bitcoin rush to cover their positions. In this case, there were $275.45 million in short liquidations on Sunday, followed by an additional $100.44 million on Monday, as reported by the crypto data provider CoinGlass.
Ryan Rasmussen, an analyst at Bitwise Asset Management, pointed out that the “god candle” on Monday and the push above $34,000 were driven by the $167 million in short liquidations, particularly on offshore exchanges. This sudden surge in price caught many investors who had been shorting Bitcoin at levels above $33,000 by surprise.
A recent development that added to the positive sentiment was the SEC’s decision not to appeal a court ruling related to Grayscale’s lawsuit. This has sparked hope that a bitcoin-related ETF could be approved in the coming months. Furthermore, companies involved in running bitcoin ETFs updated their filings, and notable investors like Cathie Wood from Ark and Mike Novogratz from Galaxy emphasized a more positive stance from the SEC toward the industry.
In the wider cryptocurrency market, Ethereum (ETH) and Ripple’s XRP also saw gains of about 6%, while tokens associated with Solana and Polygon each rose by approximately 5%. Crypto-related stocks also performed well, with Coinbase and Microstrategy up by 13% and 12%, respectively. Leading mining stocks, such as Marathon Digital and Riot Platforms, also recorded double-digit gains.
A bitcoin ETF is of great interest to investors as it would provide a way to benefit from Bitcoin’s price movements without the need to own the cryptocurrency directly. This is particularly appealing because Bitcoin is known for its high volatility, making its price movements unpredictable.
Prominent financial institutions like BlackRock, Invesco, Fidelity, and Grayscale have been advocating for bitcoin ETFs and have submitted applications for such products. They present these ETFs as safer investment options when compared to direct investments in cryptocurrencies, which are known for their speculative nature and price volatility.
Coinbase has expressed confidence that a U.S. bitcoin exchange-traded fund will receive approval from the U.S. SEC, which has further fueled optimism in the market.
The cryptocurrency industry is eagerly monitoring these developments, as they could signal a significant turnaround. Over the past year, the crypto sector has faced challenges, including scandals and controversies, such as FTX’s bankruptcy and the legal issues surrounding Terraform and its CEO Do Kwon in February. Notably, Bitcoin had reached an all-time high in November 2021, exceeding $65,000 in value, but its price plummeted to around $15,700 a year later, coinciding with the collapse and bankruptcy filing of Sam Bankman-Fried’s crypto exchange, FTX.
