Bitcoin Returns to $40,000 for the First Time in 19 Months
Early morning on December 4th, both Bitcoin and Ethereum experienced growth volatility, pushing both to new highs for 2023.
Cryptocurrency price movements at 07:15 AM on December 4th, 2023. Source: Coin360
Recent days have seen upheaval in the crypto community following the resignation of former Binance CEO Changpeng Zhao (CZ), who faced legal issues and admitted to money laundering charges in a Seattle court (USA), leading to an 18-month prison sentence. This development left many in the crypto community unsettled.
As part of a plea deal, Binance agreed to pay a fine of up to $4.3 billion to settle the lawsuit with the US Department of Justice, marking one of the largest corporate settlements in US history.
Despite initial investor concerns causing a sharp market decline, Bitcoin (BTC) only briefly corrected to around $35,600 before quickly returning to its initial race above $38,000 "as if nothing had happened."
At the time of writing, the king coin BTC officially reached $40,250 on Binance, marking its return to this milestone after 18 months since early April 2022, before the LUNA-UST crash.
1D chart of BTC/USDT pair on Binance at 07:15 AM on December 4th, 2023
This resurgence of Bitcoin has been interpreted by many analysts, notably Markus Thielen, Head of Research at Matrixport and founder of DeFi Research, who believes that CZ's resignation with a fine of less than $10 billion and Binance not being accused of misappropriating user funds or market manipulation, could serve as a positive precedent for regulatory compliance among exchanges. This could facilitate the approval of Bitcoin Spot ETFs in the United States.
Moreover, Markus Thielen predicts "Bitcoin will reach $40,000 - potentially $45,000 - by the end of the year" due to increasing demand in the price betting market, especially appealing to market makers, potentially driving significant growth for Bitcoin.
"We have two massive options expiries on November 24th and December 29th with open interest totaling $3.7 billion and $5.4 billion. Calls outweigh puts by more than 85%, with 40,000 contracts open. As we approach $40,000, more people will need to buy Bitcoin to hedge risk.
With the April 2024 halving event approaching and continuous increases in BTC mining algorithm difficulty, many are holding strong beliefs that Bitcoin will continue to advance to new highs in the coming months.
Additionally, after nearly 5 months hovering around a market cap of $83 billion, the market cap of USDT Tether stablecoin issuer has increased by over $6 billion in just 4 weeks, surpassing $89 billion for the first time in history, signaling a growing trend of institutional investors transitioning from fiat to stablecoins, potentially converting them into other cryptocurrencies like Bitcoin.
USDT market cap volatility over the past year. Source: CoinMarketCap (04/12/2023)
Finally, optimism surrounding spot ETFs from Wall Street financial firms recently may further bolster Bitcoin's resilience. According to Bloomberg researchers, there is a 90% chance the SEC will approve one or more Bitcoin Spot ETFs by January 10, 2024.
Thanks to applications for Ethereum Spot ETFs from two leading US asset managers, Fidelity and BlackRock, along with BTC leadership, the world's second-largest cryptocurrency Ethereum (ETH) has also surged to new highs for 2023 at $2,217 - surpassing the April peak, coinciding with the Shanghai upgrade allowing ETF staking withdrawals. This is also ETH's highest price since May 2022.
1D chart of ETH/USDT pair on Binance at 07:15 AM on December 4th, 2023
Recent market developments within the past 24 hours have led to over $100 million in derivative liquidations, with shorts accounting for over 62%.
Crypto market liquidation status. Source: Coinglass (04/12/2023)
