Last trading in the $35,300s and only just below recent yearly highs in near $36,000, Bitcoin (BTC) is up a stunning more than 110% on the year.
Having been as much as 77% down from its all-time highs when it fell into the $15,000s last year, Bitcoin has now managed to erase these losses to an impressive less than 50%.
Its recovery has come as a surprise to many analysts and crypto critics who declared Bitcoin and the broader cryptocurrency market dead back in 2022 in the wake of a long central bank rate hike/liquidity tightening bear market and the collapse of FTX.
Investors who didn’t get in in late 2022/early 2023 clearly missed the bottom.
But despite the fact that Bitcoin has already come a long way since its recent lows, its certainly not too late to invest.
Here are three reasons why now is a good time to buy Bitcoin.
The Bear Market Is Over
Multiple indicators point to the fact that the Bitcoin bear market of 2022 is now in the rear-view mirror.
The long crypto winter appears to have come to an end, and the crypto spring has appeared to arrive.
Firstly, Bitcoin appears to be following almost perfectly in the footsteps of its usual roughly four-year market cycle, where it sees an intense year-long pullback from all-time highs, only to then push higher and go on to hit new all-time highs over the course of the next three years.
Meanwhile, a suite of widely followed on-chain indicators tracked by Glassnode have been flashing on and off all year that Bitcoin could be transitioning into a new bull market.
The dashboard analyses whether Bitcoin is trading above key pricing models, whether or not network utilization momentum is increasing, whether market profitability is returning and whether the balance of USD-denominated Bitcoin wealth is in favor of the long-term HODLers.
Its also worth noting that, apart from the exception of March 2020 when global markets saw a short-lived melt-down on panic surrounding the spread of the Covid-19 virus, Bitcoin has never recovered more than 100% in the middle of a bear market – i.e. recoveries of more than 100% have always signalled the start of a new bull market.
Spot Bitcoin ETF approvals Coming
Its not just historical chart and on-chain analysis that suggests the outlook for the Bitcoin price is strong.
Real-world developments relating to the cryptocurrency’s adoption give cause for optimism – namely, anticipation that spot Bitcoin exchange-traded funds (ETFs) will soon get the green light in the US, opening the door for substantial “institutional adoption”, which essentially means the same as substantial capital inflows into the Bitcoin market from the traditional financial world.
Why are markets so optimistic in 2023 about spot Bitcoin ETF approvals, when the SEC has so far rejected all applications?
Because Wall Street behemoths like BlackRock stepped in with their own applications for the first time this summer, and the SEC has since backed down in its fight against a lawsuit levied against it by digital asset management firm Grayscale regarding their rejection of Grayscale’s own spot Bitcoin ETF application.
As a result, analysts almost unanimously anticipate that spot Bitcoin ETF approvals from the SEC are close.
The agency may approve one as early as this month, according to Valkyrie’s chief investment officer, Steven McClurg.
Meanwhile, the first approvals of spot Bitcoin ETFs are likely to come in before the 10th of January, which is the final deadline for the Ark 21Shares application, JPM analysts recently argued.
While estimating the potential cash inflow for such a fund remains a subject of debate among market players, projections range from $3 billion on its first day to a staggering $55 billion over a span of five years, according to a Tuesday report by Reuters.
Just as analysts nearly unanimously expect spot Bitcoin ETFs to soon gain approval, analysts are also betting that this will result in a spike in the Bitcoin price.
Crypto analytics firm Matrixport recently projected that Bitcoin could hit $42,000 if BlackRock’s ETF get approved, which it called a “game-changer”.
Santa Rally
So optimism around potential near-term spot Bitcoin ETF approvals has set the stage for a strong end to the year for Bitcoin and got some investors talking about a possible Santa Rally.
According to analysis by Matrixport, if Bitcoin is already up by over 100% at this stage of the year, there is a 71% chance that the cryptocurrency will finish the year at even higher levels, with year-end rallies averaging around 65%.
“Based on these statistics, bitcoin continues to offer upside potential, and a +65% year-end rally would lift prices back to $56,000,” Matrixport’s head of research Markus Thielen noted.
So if Thielen is correct and Bitcoin does have another 65% to go before the end of the year, now is certainly a good time to get invested in the Bitcoin market.
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