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(Kitco News) – Little changed for the price of Bitcoin (BTC) over the weekend as the top crypto continues to trade within striking distance of resistance at $35,000 after hitting its highest price in 18 months last week.
Speculation about the launch of the first spot BTC exchange-traded fund (ETF) continues to be the primary driving force behind the recent gains while rising geopolitical tensions are pushing many investors to increasingly see Bitcoin as a form of ‘digital gold’ capable of holding value during challenging times.
“Last week, Bitcoin closed at around $35,000, up by 1.4% compared to the previous week’s closing value of $34,500,” said Matteo Greco, research analyst at Fineqia International. “The week demonstrated a steady price action, with BTC fluctuating between $34,000 and $35,000, peaking close to $36,000 on Thursday, marking its highest price this year.”
BTC/USD Chart by TradingView
Altcoins have also started to show strength as the bullish rally for Bitcoin has enticed many traders to jump back into lower-cap coins in an effort to capitalize on the potential for larger gains.
“Following five weeks of continuous growth, BTC dominance decreased by 1.1%, closing the week at 53% compared to the previous 54.1%,” Greco said. “BTC dominance measures Bitcoin’s market capitalization against the total digital asset market and is an important indicator of market sentiment.”
“BTC dominance typically shifts in two key moments of market cycles: after reaching a peak and entering a downtrend, and after reaching a low and commencing a new cycle,” he said. “The recent shift indicates new investors entering the market, as it follows a long period of market downtrend.”
Greco attributed the recent rise in BTC dominance to investors shifting their funds from altcoins into BTC amid the ETF hype, but said now that the hype is starting to fade, they have begun redirecting funds back into emerging altcoins ahead of the upcoming bull market cycle.
“The decline in dominance after five consecutive weeks of increase marks the first signs of heightened investor interest in altcoins, suggesting a riskier market stance,” he said. “This trend is evident in the Total3 metric, representing the total digital asset market cap excluding Bitcoin and Ethereum, which currently stands at around $383.7 billion, the highest level since mid-April 2023. This shows an increased investor focus on riskier, less liquid assets, common in periods of restored market confidence.”
Total3. Source: TradingView
The deadline for the Securities and Exchange Commission (SEC) to make a decision on the Ark 21Shares spot BTC ETF application is set for Jan. 10, 2024, “with expectations that the SEC will either accept or reject all applications due to their similarity, without granting a first-mover advantage to any issuer,” Greco said.
An SEC approval “would likely attract substantial investments from traditional finance, inviting high-net-worth investors and further solidifying digital assets as a widely accepted asset class,” he said. “Conversely, a rejection would likely yield a short-term negative impact, given the existing investor confidence that an approval is on the horizon, partly factored into current market sentiment.”
On the macroeconomic front, investors are now waiting to see how the Federal Reserve will move forward with interest rates after holding them steady at last week’s FOMC meeting, suggesting a less aggressive monetary policy stance.
“Market participants do not anticipate further rate increases, with expectations of a first 25bps cut during Q2 in 2024,” Greco said. “This indicates positive momentum for the financial markets as it signals the Fed might have reached the peak in interest rates, refraining from further reducing market liquidity compared to current levels.”
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
