Bitcoin (BTC) spiked today to as high as $35,000, a price not seen since May 2022. In this post, I share my opinion on why this is happening and what happens next.
Key Takeaways
- BTC posted its largest daily gain (+10.2%) of the year on Monday, and price continued to climb into Tuesday.
- The main reason for the price jump was two developments that further indicated the SEC was preparing to approve a spot bitcoin ETF.
- While it’s impossible to predict what happens next, I’d be delighted to see BTC consolidate and hold above $32,000 over the coming days.
- Today was some nice validation for everyone who has been accumulating in the bear market, but we have a long way to go. I still think BTC will go up by multiples in the long term.
Why Did This Happen?
The driver of today’s rally was the arrival of two further indicators that the U.S. Securities and Exchange Commission (SEC) is preparing to approve a spot bitcoin ETF. (For those unaware of the significance of a spot ETF approval, read Nick’s recent post.)
The first of two indicators was the fact that, as noted initially by finance lawyer Scott Johnsson, an updated spot ETF filing from BlackRock—the most well-known of the various prospective ETF issuers—indicated that the asset manager may move to seed its proposed ETF with cash as early as this month.
Eric Balchunas, senior ETF analyst at Bloomberg, said that this update signals that BlackRock is expecting to launch the fund in the near future. Importantly, he did later point out that seeding “is typically not a lot of money,” just enough to get the ETF going. (For more information, click through to Eric’s below post to read his follow-on comments.)
The second of two fresh indicators was also in relation to BlackRock’s ETF application. This time, it was the fact that BlackRock’s proposed ETF had been listed on the Depository Trust & Clearing Corporation (DTCC), which clears trades executed on the Nasdaq exchange.
It’s worth pointing out that these two developments do not guarantee SEC approval. However, they suggest that things are moving in the right direction.
Another Possible Driver of Price
Of course, rarely is anything solely explained by a single event or factor. Another likely contributor to BTC’s wild price action on Tuesday was a so-called gamma squeeze. This is a concept specific to the world of options, a domain in which I have limited knowledge.
For more on the causes of the gamma squeeze, read the below thread by Alex Thorn of Galaxy Investments. (An even deeper explanation is available in this recent episode of the ‘Galaxy Brains’ podcast.)
Miscellaneous Notes From Today
These notes will help you better appreciate today’s price action, but are not essential for you to read.
- Despite increased optimism surrounding a potential ETF approval, the SEC will almost certainly not approve anything until multiple days after Nov. 8, the final deadline for a comment period related to a proposed rule change that is needed to list a spot bitcoin ETF.
- After this deadline, a comment review will take place. There are usually “30–60 days” reserved for this, as per a post on X from lawyer Joe Carlasare.
- Today’s price jump was enough to:
- Monday’s inflows into international publicly listed bitcoin ETFs and ETPs were 10% of the YTD total.
- Of the 5 largest exchanges by spot volume, OKX accounted for nearly 50% of spot BTC volume during today’s burst in price, as per crypto data firm Kaiko.