Below are the five key reasons behind Bitcoin’s recent price movements.
In a notable display of bullish momentum, the price of Bitcoin (BTC) has soared, almost touching its all-time high of $69,044 set in November 2021. The cryptocurrency’s value rose to an impressive $68,848 before facing a 5% correction, subsequently falling to $64,200.
However, the market quickly recovered, with BTC trading above $67,000 once again. This increase can be attributed to a combination of factors driving the upward trajectory, which are explained below.
Supply Shock Due to Demand for Bitcoin ETFs
The Bitcoin ETF spot market has witnessed another day of significant inflows, with a particular highlight being Fidelity and BlackRock, which funneled over $400 million each into BTC. Fidelity posted a record inflow of $404.6 million, while BlackRock followed closely with $420 million.
Eric Balchunas commented on the phenomenon in the following terms:
“All ten Bitcoin ETFs are virtually locked in to record their second-highest volume day today. So it seems like last week’s big spike in business activity was more of a new normal than an anomaly. Today was the second highest volume day for the Ten, with around $5.5 billion. IBIT alone generated $2.4 billion and has exceeded $11 billion in total.”
This influx is indicative of a supply shock, as demand for the ETFs absorbs a substantial portion of the available Bitcoin, reducing supply and therefore driving prices up.
Coinbase Premium Signals Institutional Buying
The rise in BTC price is also reflected in the significant increase in Coinbase premium, a clear indicator of institutional interest. Furkan Yildirim, a prominent crypto analyst, stated that “Coinbase Premium is in full swing, indicating a possible all-time high for Bitcoin.”
This sentiment was shared by @tedtalksmacro, who noted that “Huge BTC spot premium on Coinbase. The big guys are buying. […] For context, this is the largest premium seen in this bullish leg. institutional FOMO.”
Coinbase Premium, a metric that indicates the price difference between Coinbase’s BTC price and other exchanges, serves as a bullish signal, highlighting aggressive buying by institutions and high-net-worth individuals, especially during regular trading hours.
BlackRock’s Strategic Move Towards Bitcoin
BlackRock’s recent filing to integrate BTC exposure into its Strategic Income Opportunities Fund (BSIIX) is another watershed moment. With the fund’s significant assets of $36.5 billion under management, this inclusion marks an important nod to the growing acceptance of Bitcoin among traditional investment vehicles.
While BSIIX is not the largest fund, it could be the starting signal for Bitcoin ETFs to be included in larger and, above all, larger investment funds from BlackRock and others. This would be extremely bullish.
Continued Bitcoin Accumulation by MicroStrategy
MicroStrategy announced a new issuance of $600 million in convertible senior notes, intended for BTC purchases and general corporate purposes. This move signifies not only an investment strategy but a deep belief in Bitcoin’s value proposition. This strategy not only underlines Saylor’s bullish outlook on BTC but also introduces significant buying pressure into the market.
The ‘Kimchi Premium’ Phenomenon
The ‘Kimchi Premium’ (the price difference between South Korean and foreign exchanges) has re-emerged as a notable factor. On Upbit, South Korea’s largest exchange, BTC and ETH were trading at premiums of approximately 6% and 7%, respectively.
This shows that it is not just the US market that is driving the price of BTC. The premium for kimchi is a testament to the high demand and speculative interest within the South Korean market. At the time of publication, BTC was trading at $67,008.
By Audy Castaneda
