Bitcoin has surged past the $41,000 mark, displaying impressive resilience and sparking investor interest. A recent report from blockchain analytics firm IntoTheBlock reveals that over 80% of bitcoin holders are now in profit, marking the highest profitability level in two years.
Bitcoin’s Profitability Surges: A New High Since 2021
Blockchain analytics firm IntoTheBlock has disclosed a noteworthy statistic: an impressive 81.35% of bitcoin holders are currently in profit. This achievement represents the highest level of profitability observed since December 2021 when bitcoin soared above $50,000. This places bitcoin in a position reminiscent of the pre-bull run period in 2020–21.
Factors Contributing to Bitcoin’s Bullish Momentum
Bitcoin’s value has now surpassed the $41,000 mark, a level not witnessed since the destabilization of TerraUSD in May 2022. As of the latest data from CoinGecko, bitcoin is trading around $41,800, showcasing a remarkable 20.3% increase in the past 30 days. This year alone, bitcoin has rallied over 120%, with optimism prevailing for a continued surge into 2024.
Technical indicators such as the Relative Strength Index (RSI) and the Awesome Oscillator (AO) suggest a positive momentum sustained by bullish activities in the bitcoin market. Analysts foresee an increased buying pressure that could potentially drive bitcoin’s value beyond its current high.
Anticipation of Key Events: ETF Approval, Halving, and Rate Cuts
Bitcoin’s current profitability seems poised for further growth, supported by multiple indicators. Market experts attribute the bullish drive to various factors.
First, the anticipation of a potential approval for a bitcoin spot exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC) has fueled optimism. The imminent approval of spot Bitcoin ETFs is expected between January 5–10 2024. Bloomberg analyst James Seyffart’s predicts an approval order between January 8–10 2024. Reports emerging about the Securities and Exchange Commission (SEC) engaging in discussions with Grayscale, BlackRock, and Nasdaq regarding Bitcoin ETF applications signify a potential shift in the investment landscape. This will pave the way for the indirect investment in the bitcoin market by the wide audience.
Read also: Bitcoin Spot ETF vs. Bitcoin Futures ETF
Second, the upcoming Bitcoin halving event scheduled for April 2024 is also a contributing factor.
Third, inflation and possible rise in interest rates that may trigger recession. According to analysts, this development is the greatest motivation which will kick off in March of the coming year. The CEO of JP Morgan Chase Jamie Dimon has warned that there could be trouble ahead in the economy because of inflation and possible rise in interest rates that will lead to recession. This cautionary stance emphasizes the need for investors to stay vigilant amidst the evolving economic landscape.
Lastly, historical data supports strong performances in the final quarter of the year.
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Bold Predictions for Bitcoin in 2024
Several financial institutions have made bold predictions for bitcoin in 2024. Standard Chartered reiterated its April price call, projecting bitcoin to reach $100,000 by the end of 2024, driven by the approval of numerous ETFs. Matrixport, a crypto financial services firm, released a note forecasting bitcoin to reach $63,140 by April 2024 and $125,000 by the end of next year. The projections align with expectations of a favorable macro environment and potential Federal Reserve interest rate cuts.
Profit-taking and Potential Price Correction
While the current market sentiment is positive, it’s crucial to acknowledge potential risks. If profit-taking ensues, with traders reaching out for short-term gains, bitcoin price could experience a downturn. Key levels to monitor include $37,500, $35,000, $32,500, $31,529, and in a more dire scenario, the psychological level of $30,000. A 25% drop from current levels would constitute a significant correction.
Read more: Bitcoin hits $35,000 as investors expect BlackRock’s Bitcoin ETF Approval
Credit: Solomon Victor is a Technical Analyst who is also knowledgeable about various aspects of blockchain and cryptocurrency.
