Cryptocurrencies witnessed a highly volatile week as the speculations around the approval of Bitcoin Exchange-Traded Funds (ETFs). Bitcoin started the year with a bang, touching a 21-month peak of $45,532, but it soon slipped to $40,813 the next day. On Friday, Bitcoin was trading at $43,946.33, according to CoinMarketCap.
Ethereum, the second largest cryptocurrency, crossed $2,400 on January 2 but fell to $2,181 the next day. On Friday, it was trading at $2,258.88, down 3.35 per cent in the last seven days.
According to Parth Chaturvedi, investments lead at CoinSwitch Ventures, the sell-off on January 3 was due to a report by an analyst from MatrixPort suggesting that the approvals would be delayed further to June.
“Bitcoin witnessed a resurgence to $44,000 in the last 24 hours, triggered by Thursday’s reports of the Securities and Exchange Commission’s (SEC) final comments to issuers, suggesting potential approval for Bitcoin spot ETFs. This recovery came after Wednesday’s crash, restoring optimism among market participants,” said Edul Patel, chief executive officer at Mudrex.
“The markets stabilised after digesting the gravity of the report and witnessed a recovery, even as the speculative drama around the spot Bitcoin ETF approval lingers on,” Chaturvedi added.
The experts, however, continued to be positive about the chances of approval of Bitcoin ETF. According to Bloomberg, the chances are as high as 90 per cent.
“Even JP Morgan, whose CEO had recently bashed Bitcoin, has been named as an authorised participant for Blackrock’s application,” Chaturvedi added.
Another notable development during the week was the Centre’s issuing of compliance show cause notices to nine offshore crypto exchanges, including Binance, Kucoin and Huobi. The notices were issued by India’s Financial Intelligence Unit (FIU), which falls under the Ministry of Finance. It also asked the IT ministry to restrict the websites of these companies.
However, it did not have a major impact on the crypto prices.
According to CoinDCX’s research team, sustaining the level of $44,000 is important for Bitcoin to establish a positive momentum. “To initiate a positive trend, Ethereum needs to reclaim levels above $2,380,” it added.
“The establishment of $43,900 as a support level, if achieved, may signal an uptrend upon closing above it,” Patel said.
First Published: Jan 05 2024 | 2:26 PM IST
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