After bulls flattened out after breaking above $35,000, Bitcoin price consolidated around $34,500 for a while.
The rise in Bitcoin’s value is based on expectations that the first U.S. exchange-traded funds (ETFs) that invest directly in cryptocurrencies will be approved in the near future.
Bitcoin’s weekly relative strength index (RSI), a momentum indicator, recently broke above the 70 level for the first time since 2021.
The increased likelihood of spot Bitcoin ETF approvals would also push up Bitcoin prices: Would these approvals lower BTC prices?
What impact will the approval of a Bitcoin ETF have?
Bitcoin price has been consolidating around $34,500 for a while after bulls flattened out after breaking above the 2023 high of $35,000 earlier this week.
The rise in the value of Bitcoin is based on the expectation that direct investment in the world’s largest cryptocurrency will soon be approved by the first exchange-traded funds (ETFs) in the U.S. The real question here is whether the actual approval of the ETFs will lead to some investors taking profits.
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Therefore, as the spot Bitcoin ETF lands in the U.S. market, Bitcoin continues to test whether the rally can continue. Hayden Hughes, co-founder of the Alpha Impact social trading platform, told COINOTAG:
“The market has already priced in approval of a Bitcoin spot ETF, and if approved, I expect a ‘sell the news’ event to occur.”
The largest digital currency has risen 16% this week and even briefly surpassed $35,000, a level it hasn’t reached since 2022. In contrast, global stock markets have struggled during a period of rising long-term Treasury yields and deepening geopolitical uncertainty.
In the current macro environment, Bitcoin and cryptocurrencies appear to be deviating from other risk assets such as U.S. stocks. However, it remains to be seen how much further Bitcoin will outperform the U.S. stock market.
BTC: Technical and Derivatives Data
Fibonacci ratios suggest potential resistance for a Bitcoin reversal just below $36,000. This area is marked by the 38.2% Fibonacci retracement of Bitcoin’s year-long decline through November 2022.
The weekly relative strength index (RSI), a momentum indicator for Bitcoin, recently crossed above the 70 level for the first time since 2021. RSI readings above 70 are generally considered “overbought,” indicating a low probability of a quick rebound, such as the recent 10 percent daily gain.
Data from Deribit, the largest cryptocurrency options exchange, shows a massive accumulation of bullish bets on Bitcoin reaching $40,000 by the end of the year. That’s a 16% increase from current price levels.
On the other hand, Bitcoin seems to have stolen the limelight from gold in its recent rally. Mike McGlone, senior macro strategist at Bloomberg, believes that the dynamics between Bitcoin and gold have changed. Previously, the resistance levels between cryptocurrencies and gold changed about tenfold in 2020, but as Bitcoin becomes increasingly mainstream, the future approval of a spot Bitcoin ETF in the United States may weaken gold's relative position.
