Bitcoin experienced a sudden sharp drop to 40,000 USD today before recovering to its current level. The price decrease reached 10%, witnessing a significant volume being liquidated in the market. Despite this, Bitcoin is still trading at its highest level in nearly two years, following a strong start in early 2024.
This cryptocurrency surpassed the 45,000-dollar mark (35,000 British pounds) on Tuesday for the first time since April 2022, primarily driven by speculations surrounding the potential approval of Bitcoin exchange-traded funds (ETFs).
The U.S. Securities and Exchange Commission is currently reviewing several Bitcoin ETF proposals, which could open up the cryptocurrency market to institutional investors and serve as a validation of Bitcoin as a mainstream asset. Despite years of speculation, no Bitcoin ETF has been approved by regulatory authorities. There are currently 13 projects under review, with some cryptocurrency analysts believing that a more mature market may eventually see at least one of them gaining approval.
Decisions are expected to be announced in December, but the delays have heightened optimism for a positive outcome. Some analysts have cautioned that Bitcoin ETFs could be a case of “buy the rumor, sell the news,” meaning any announcement from the SEC could lead to a sharp decline in Bitcoin prices.
Matteo Greco, an analyst at the digital asset investment firm Fineqia International, noted that the approval of Bitcoin ETFs could witness “a retreat of prices before they rebound.” Greco also predicted that a rejection could result in “short-term negative price action.”
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The strong start to 2024 follows Bitcoin’s best year since 2020, with a remarkable 158% increase, pushing the cryptocurrency market capitalization to nearly 900 billion USD and the overall cryptocurrency market to over 1.75 trillion USD.
Bitcoin still has a long way to go to reach its all-time high of 68,000 USD, achieved after the record-breaking surge in November 2021.
