Bitcoin (BTC) has climbed to heights not witnessed since May 2022 when the cryptocurrency sector was grappling with a series of controversies.
What began as a noteworthy milestone was Bitcoin surpassing the $31,000 mark on Monday. However, the cryptocurrency’s price experienced a rapid ascent. Later in the day, it surged past $32,000, $33,000, $34,000, and finally $35,000 within just a few minutes. Perpetual contracts listed on Binance’s exchange came close to touching $36,000.
These price levels take Bitcoin back to where it was last seen in May 2022, prior to a series of events involving Terra-Luna, Three Arrows Capital, Genesis, and FTX that soured market sentiment and drove Bitcoin’s price to nearly $15,000. At the time, the industry’s very survival seemed to be in question for some.
However, market sentiment has improved considerably, driven in large part by the prospect of Bitcoin exchange-traded funds (ETFs) that are seen as potential game-changers, making it significantly easier for investors to buy BTC and expanding the pool of potential participants.
Currently, Grayscale, the largest exchange-traded Bitcoin product, operates as a trust, which has certain limitations. Although the U.S. Securities and Exchange Commission rejected its bid to convert the product into a more attractive ETF, a recent court decision criticized that rejection, and the SEC has chosen not to appeal. This development raises the likelihood that Grayscale will successfully launch its own ETF.
BlackRock, the world’s largest asset manager, has also expressed optimism about Bitcoin’s prospects and has submitted its own Bitcoin ETF application to the SEC, along with other traditional financial firms. BlackRock CEO Larry Fink recently noted a growing demand for cryptocurrency among their clients.
Notably, the BlackRock ETF has appeared on the Depository Trust & Clearing Corp. website, a crucial U.S. market utility responsible for processing all securities transactions. While this listing doesn’t confirm ETF approval, the fact that BlackRock has reached this stage in preparation signals a sense of optimism.
In the hour surrounding Bitcoin’s rapid surge on Monday, over $167 million worth of derivative positions were liquidated, contributing to the daily total of $344 million, according to CoinGlass. Open interest, a metric that measures the notional value of all derivative positions, failed to keep pace with Bitcoin’s ascent. It dropped from a peak of $10.5 billion to $9.4 billion due to liquidations, short positions being stopped out, and long positions taking profits.
Furthermore, Galaxy Digital’s recent market report highlights an emerging narrative in the options market. At the $32,500 level, options dealers would need to purchase nearly $20 million worth of BTC for every 1% move upward to maintain delta neutrality.
