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Bitcoin breaks through $40,000, analyzing the factors behind the price increase

On December 4, Bitcoin exceeded US$42,000, with a daily increase of 6.33%, setting a new high this year. In this article, we analyze what factors have contributed to the recent rise in Bitcoin’s value

Bitcoin Spot ETF Expectations

As fake news about the adoption of a Bitcoin spot ETF in October fermented, news of the application for a Bitcoin spot ETF continued to stimulate the crypto market. Currently, the total assets under management of the 14 Bitcoin spot ETF applicants is $14 trillion, and analysts believe that stock, bond and gold investors only need to allocate a small part of their assets to have as much as $70.5 billion of funds flowing into crypto. market. Even more conservative projections would see tens of billions of dollars entering the market in the first few years.

At the end of November, the US SEC met with eight institutions including Grayscale, BlackRock, Hashdex, Bitwise, VanEck, Fidelity and Invesco regarding their respective Bitcoin spot ETF applications. On November 30, when BlackRock met with the SEC’s Trading and Markets Department, it also showed them a “revised” Bitcoin ETF spot physical model design. In the new model, offshore entity market makers operate from Coinbase Get Bitcoin and cash advances with a US-registered broker-dealer.

On December 1, Bloomberg analyst James Seyffart also said that the approval window for a Bitcoin spot ETF is expected to be between January 5 and 10, 2024. According to the SEC filing, the comment period ends on January 5 for Franklin/Hashdex and is due on January 10 for Ark/21.

On the same day, Coinbase CEO Brian Armstrong said in an interview that he was “quite optimistic” about the approval of the spot Bitcoin ETF. Armstrong said “from everything that has been read publicly, it feels like the spot Bitcoin ETF is getting closer and closer to approval.”

Institutional Investment

Another factor for the recent rise in Bitcoin’s price is the increasing interest from institutional investors. Companies like MicroStrategy, Square, and MassMutual have all invested significant amounts of money into Bitcoin, signaling a growing acceptance of the cryptocurrency in the traditional financial world. This influx of institutional investment has added legitimacy to Bitcoin and has helped to drive up its price.

Binance reaches settlement with regulators

In November, in addition to strong prices, the crypto market also took a big step forward in terms of regulation. The settlement between Binance and US regulators sends a positive signal to the market. Binance pays full $4.3 billion DOJ fine without selling crypto assets at all.

Binance’s new CEO Richard Teng also said that “Binance has no debt within its capital structure and its fees are moderate. Although the fees we charge users are lower, we have strong revenue and profits.” This gave the market a boost.

Safe Haven

In times of economic uncertainty, investors often turn to safe-haven assets to protect their wealth. With the resulting economic downturn, many investors have turned to Bitcoin as a safe haven. This is due to the fact that Bitcoin is decentralized and not tied to any government or central bank, making it less susceptible to economic turmoil. As a result, the demand for Bitcoin has increased, driving up its price.

Increased Adoption

Finally, the increased adoption of Bitcoin has also played a role in its recent price surge. More and more businesses are starting to accept Bitcoin as a form of payment, and some countries, like El Salvador, have even made it legal tender. This increased adoption has led to a wider acceptance of Bitcoin and has helped to drive up its price.

Conclusion

From speculative trading to institutional investment and increased adoption, all these factors play a role in driving up demand for Bitcoin, as well as its price. In addition to some macro factors, the activity of the Bitcoin ecosystem has also increased the number of transactions in the secondary market, thereby driving up the price of Bitcoin. And the profits of Bitcoin miners continue to increase. As with any investment, it is important to do your own research and understand the risks involved before investing in Bitcoin or any other cryptocurrency.

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