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The crypto market saw a surge this week with Bitcoin rising 0.47% to $43,895 and Ethereum back above $2,300. Driving the gains were optimism around a Bitcoin spot ETF approval and Coinbase expanding globally.
The rally comes at a pivotal moment for the crypto industry heading into 2024. While macroeconomic challenges remain, pro-crypto regulatory moves could accelerate adoption.
Crypto Rally : Spot Bitcoin ETF Approval Appears Closer
The SEC has been pushing crypto ETF issuers to use cash-creation models instead of in-kind redemptions. Many see this as a positive sign that spot Bitcoin ETF approval is near.
“We’re hearing it wasn’t one giant call between the SEC and every issuer but rather multiple discussions reiterating cash creations or you’ll wait, which we knew from the updated filings. Still, it’s an encouraging sign for January,” said Bloomberg analyst Eric Balchunas.
In a cash-creation ETF, authorized participants directly buy or sell the actual underlying asset – in this case, Bitcoin. That contrasts with futures-based ETFs today where Bitcoin futures contracts are traded instead.
Bloomberg’s ETF analysts estimate a 90% probability that the SEC will approve cash-settled Bitcoin ETFs by January 10, when certain filings reach the end of their review period.
“We think it’s likely the SEC stops kicking the can on spot bitcoin ETFs and approves a handful of the 19 proposals it is currently considering,” the analysts wrote in a note.
Several asset managers have already amended their ETF filings to shift to cash redemption models, including Ark Invest, VanEck, and Valkyrie.
Approval could see billions in inflows from institutional investors who have been awaiting regulatory clarity. This wall of new demand could provide a significant tailwind for Bitcoin prices.
Crypto Rally : Coinbase Wins License to Offer Crypto Across France
In another bullish development, Coinbase announced it received regulatory approval to operate as a registered digital asset services provider in France.
This allows Coinbase to offer its full suite of consumer and institutional crypto products and services across the country. French users can directly buy, sell, and trade cryptocurrencies through Coinbase’s retail platform.
Equally importantly, institutional investors such as hedge funds and banks will gain access to Coinbase’s advanced trading tools, custody, prime brokerage, and capital introduction services.
France represents a crucial market in Coinbase’s global expansion strategy. As a G7 country, regulatory approval establishes a credible framework for offering compliant crypto services.
“France represents an important market for us and this represents another step forward in our ‘Go Deep, Go Broad’ international strategy,” said Coinbase in its announcement.
Coinbase stock (COIN) rallied on the news, rising over 3% to hit $170, its highest level since the April market downturn. The company has been diversifying beyond the United States as its domestic regulatory issues remain unresolved.
Crypto Rally : Elon Musk Discusses Payments and Crypto for Twitter
In a Twitter spaces discussion with Ark Invest’s Cathie Wood, Elon Musk revealed ambitions to enable payments and money transfer functionalities on Twitter by mid-2024.
This would involve obtaining regulatory approvals for activities like direct bank transfers and debit card transactions. While not directly mentioned, the ability to send cryptocurrency tips and payments could be a logical extension.
“We’ve talked before about authenticated payments through Twitter where Twitter would have a revenue share on authenticated payments through Twitter,” noted Musk. This caused an immediate spike in Dogecoin (DOGE) prices during the talk.
DOGE has been promoted by Musk as a lighthearted but practical cryptocurrency for smaller payments. The meme coin rose around 4% on Thursday following his comments.
Enabling crypto transactions could significantly boost Twitter’s revenue while tapping into the growing crypto and Web3 user base. Social and content platforms like Reddit, YouTube, and Twitch have already moved towards supporting cryptocurrency payments.
While Musk’s plans are still aspirational currently, the regulatory groundwork he is laying could pay off down the line as crypto matures.
Crypto Rally : Macro Environment Remains Key to Crypto’s Prospects
The mood was upbeat across crypto markets following the positive developments. However, the macro backdrop will likely remain the overarching force driving prices as 2024 is going to start
Inflation trends, central bank policy, and the direction of equities and forex markets have shown high correlation with Bitcoin and crypto prices in recent months.
For instance, the US dollar pulling back from highs has eased pressure across risk assets like stocks and crypto. But continued Fed rate hikes could renew that headwind.
Most analysts remain cautiously optimistic about 2024 but advise expecting continued volatility in the absence of clear trends.
“We advise a non-emotional, data-driven approach to trading in choppy markets,” said market analyst Ankit Agarwal. “With proper risk management, there are always opportunities across both bull and bear scenarios.”
Technical Analysis – Bitcoin Faces Resistance at $44,000
Bitcoin managed to reclaim the psychologically important $44,000 level briefly during Thursday’s rally. But it faces immediate overhead resistance at $44,690.
The area around $44,500 has proven stubborn resistance through December, having rejected price advances multiple times. A convincing break above would be a bullish sign and opens the door to retesting $45,000.
On the downside, BTC has built a support shelf at $42,500 over the past week. Below that, the 200-day EMA around $41,500 is the critical area to hold.
Losing the 200-day would likely signal a retest of 2022 lows near $36,000 as part of a broader macro downtrend.
The RSI indicator on daily charts is rising but not yet overbought, suggesting room for further upside. BTC will need to see strong volumes on any breakout attempt to flip overhead resistance convincingly.
Crypto Rally : Ethereum Faces Resistance Around $2,300
Ethereum likewise had a solid day, gaining over 2% to $2,292. However, like BTC, it is approaching tough prior resistance zones.
The $2,300 area has marked the ceiling of price action through most of 2022. Beyond it, the psychological $2,500 level is the last major resistance before ETH can target its all-time high above $4,000.
On the downside, ETH/USD remains well above its 50-day EMA at $1,750. This is a positive sign of bullish momentum. The 200-day EMA is way lower around $1,500, making a test unlikely barring broader capitulation.
The RSI metric is rising into the 60s, but well below overbought levels above 70. This suggests some fuel left in the tank for a potential ETH breakout.
Overall, technicals remain constructive but are approaching likely resistance zones. Strong volumes on a break higher will be needed or sellers could regain control.
Frequently Asked Questions on Crypto Rally
Q: Why did Bitcoin and crypto prices rise sharply ?
A: Key drivers were spot ETF approval hopes, Coinbase expanding into France, and Musk discussing crypto for Twitter.
Q: How close is the SEC to approving a spot Bitcoin ETF?
A: Analysts estimate 90% odds of approval by January 10th given recent comments and filings. This is boosting market sentiment.
Q: How important is Coinbase’s entry into France?
A: Regulatory approval in a major G7 economy validates Coinbase’s credentials and paves the way for global expansion.
Q: What did Elon Musk say about enabling crypto on Twitter?
A: He wants to add payment capabilities by 2024, which would open the door for crypto tipping and transactions.
Q: What are the next technical resistance levels to watch for BTC and ETH?
A: BTC faces overhead resistance around $44,500, while ETH must break $2,300 convincingly to continue higher.
Q: How will macroeconomic trends impact crypto in early 2024?
A: Inflation, monetary policy, equities performance, and the dollar’s strength will remain correlated to crypto asset prices.
Q: Should traders be bullish or bearish on crypto headed into 2024?
A: Cautious optimism advised, but expect continued volatility. Agility to trade both long and short will be advantageous.
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Conclusion
The crypto market saw an encouraging rally on Thursday driven by a confluence of positive catalysts. The prospect of a spot Bitcoin ETF, Coinbase’s global expansion, and Elon Musk’s vision for crypto payments on Twitter all gave buyers confidence.
However, major uncertainty remains on how macroeconomics, regulation, and technical resistance will play out. While reasons for optimism exist, traders should expect continued volatility and manage risk accordingly.
As we are going to enter into 2024, agility and accessing opportunities across varying market conditions appear to be the best strategies. Rather than binary bets on up or down, nuanced approaches reflecting mixed realities may prove most prudent.
Disclaimer:
The information provided in this article is for educational purposes only. It is not intended as financial advice. Trading cryptocurrencies involves a substantial risk of loss and is not suitable for all investors. You should conduct your own research before making any investment decisions. Cryptocurrencies are highly volatile unregulated investment products. CryptoWini will not accept liability for any loss or damage as a result of reliance on the information contained within this article.
