Bitcoin (COIN: $BTC), also known as digital gold, recently crossed the $38K mark. The world’s leading cryptocurrency is now trading at levels last seen in May 2022. It signals a growing appetite for international alternative investments.
Why BTC Is Rising?
A major reason why Bitcoin is rising is the inflow of institutional money. It comes soon after a resolution of various legal issues involving major crypto players. For instance, Changpeng Zhao, the former CEO of Binance, recently announced they had settled with US authorities. In a Twitter post, he clarified that Binance was not guilty of misappropriating user funds and manipulating the market. Before that, Ripple ($XRP) had won a decisive victory against the SEC in court.
Before that, US authorities successfully charged the head of the failed FTX exchange, Sam Bankman-Fried, for fraud. Another reason BTC could be rising is the imminent approval of a US spot Bitcoin ETF. Consequently, it has helped to clarify the legal standing of Bitcoin. With legal clarity, institutional investors are more willing to invest in crypto assets. They are now more confident in the authorities’ ability to deal with bad actors in the sector.
According to data from Binance, whales have accounted for 24.16% of all inflows into Bitcoin in the past 24 hours.
Another reason BTC might be rising is the recent victory of Javier Milei in Argentina’s presidential election. Milei has expressed pro-crypto sentiments in the past. Consequently, increased adoption of BTC in Argentina, a country of over 45 million people, and a relatively high GDP could significantly boost its price.
Impact on Crypto-Related Shares
The new 52-week high for Bitcoin has also positively affected crypto-based stocks. For instance, Coinbase Global Inc. (NASDAQ: COIN), Marathon Digital Holdings Inc. (NASDAQ: MARA), and CleanSpark Inc. (NASDAQ: CLSK) were all trending upwards during the Friday trading session.
Coinbase stock rose to $115.75 during the session, marking a major improvement last seen one year ago. The COIN stock rally coincided with the general crypto market rally that saw BTC cross $38K. Its rally echoes its performance before the May 2022 crypto market crash. Major movements in the crypto market have traditionally affected COIN stock.
Another reason for the COIN rally is the anticipated launch of the Bitcoin ETF. Coinbase has collaborated with BlackRock and Fidelity, two leaders in the financial world. The collaboration’s focus will be providing custodial services for their upcoming Bitcoin ETFs.
CleanSpark stock rose around 11% on Friday after BTC hit a new 52-week high. Trading volumes for CLSK rose dramatically to over 14.8 million on Friday, compared to the 13.12 00-day average for the stock. The rise in volume and demand for CLSK is in response to the Bitcoin ETF, which is awaiting approval from the SEC.
Bitcoin Price Forecast
Since Bitcoin achieved its new 52-week high of $38,392.79 on November 24, 2023, it has dropped slightly to $37,702.87. It has led some market analysts to predict a pullback to $30,000, even with the bulls preparing for a new high of $40,000.
One reason for the negative sentiment is the Bitcoin Relative Strength Index (RSI) trending to new lows. Analysts believe the disparity between the current BTC price and RSI trends could lead to bearish divergence.
Should You Buy BTC?
Some analysts believe that the BTC rally could soon experience a significant correction. The result could be that the price of BTC drops to just about $31K, which could ignite another rally back towards $40K. However, the price of BTC could continue rising in anticipation of the Bitcoin halving of April 2024. As with any crypto investment, you should only invest that which you can afford to lose.
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