Bitcoin has shown resilience in the face of macroeconomic challenges, outperforming other risk-sensitive assets. Market optimism about the potential approval of spot Bitcoin exchange-traded funds (ETFs) has contributed to a modest price increase of less than 1% over the past 24 hours, pushing Bitcoin above $28,550.
Sustained Highs and False Hopes
Continuing its rally from last Friday, Bitcoin has reached its highest levels since mid-August. The recent spike above $30,000 on Monday, triggered by a false report about the approval of the first spot Bitcoin ETF, underlines the significant impact this catalyst can have on the crypto market. This development could inject much-needed volatility into an otherwise stagnant market.
Bullish Dominance and Potential Recovery
Chart analysis indicates a bullish dominance in Bitcoin’s current position near $28,500. An upward channel has been established since early September, marked by a sequence of more than three higher highs and lows. Analyst Alex Kuptsikevich from broker FxPro suggests that the market could quickly recover from the mid-August selloff and move towards the $29,400 level.
Bitcoin’s ability to weather macroeconomic headwinds and maintain its upward trajectory is bolstering investor confidence. With hopes of spot Bitcoin ETF approval on the horizon, the crypto market eagerly awaits any potential change in dynamics and increased volatility.
Bitcoin Bulls Anticipate Spot ETFs to Drive Investor Interest
Bitcoin bulls are optimistic that the introduction of spot ETFs will ignite a surge of investor interest in cryptocurrencies and pave the way for institutional adoption of digital assets. The prevailing sentiment is centered around the possibility of the Grayscale Bitcoin Trust converting into an ETF and the potential approval of spot Bitcoin ETFs by the Securities and Exchange Commission, including offerings from traditional financial powerhouses like BlackRock.
Amidst the ETF frenzy, Bitcoin has outperformed other risk-sensitive assets, such as stocks, as both the Dow Jones Industrial Average and S&P 500 have struggled to gather momentum.
Stocks experienced a sell-off on Tuesday, which carried over into Wednesday, as concerns grew over the U.S. economy’s persistent strength and mounting tensions in the Middle East, which could drive up oil prices and trigger inflationary pressure. These factors might compel the Federal Reserve to maintain higher interest rates for a longer duration than initially anticipated, potentially posing a significant challenge for high-risk assets.
In contrast to Bitcoin’s performance, Ether, the second-largest cryptocurrency, only dipped by less than 1%, settling at $1,580. However, smaller tokens or altcoins saw more substantial declines, with Cardano and Polygon both experiencing a decline of 2%. Similarly, memecoins like Dogecoin and Shiba Inu also faltered, each facing a 2% decrease in value.
Altcoins Face Uncertainty as Ethereum Struggles
“The picture in the altcoins is less optimistic. Ethereum has been making lower and lower local highs and lows for the past two weeks after coming under increased pressure following a consolidation below the 200-week average, with the 50-week average acting as local resistance,” said Kuptsikevich.
