Bitcoin's BlackRock premium: A bubble about to burst? – Proactive Investors USA

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William kickstarted his career as a researcher and reporter for a global legal publication, covering everything from public law to M&A. Before moving to Proactive Investors, he worked as a reporter for a major fintech company with a focus on cryptocurrency and blockchain technology. Harking from Queensland, Australia, William obtained first-class honours in journalism and media from Birkbeck University before going on to complete an MA in creative and critical writing. Other jobs have… Read more
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Published: 04:58 30 Oct 2023

Bitcoin (BTC) has reverted to a sideways trading channel following an extremely bullish fortnight that saw the benchmark cryptocurrency return to highs not seen since the TerraUSD stablecoin (UST) collapse precipitated a $3 trillion crypto market rout in May 2022.
When the $40 billion UST stablecoin depegged from the US dollar under the weight of Ponzi-like economics, what followed was a string of events that sent the crypto markets into a tailspin that some saw as the end of the road for the crypto experiment.
FTX’s collapse last November felt like the final nail in the coffin, as vast sums of investor wealth began pouring out of the cryptocurrency markets for fear of similar bank runs in the remaining top-tier exchanges.
Bitcoin opened the new year in a grim position, below $17,000 and less than a quarter of its price barely a year earlier.
There’s a certain irony that the world’s largest asset manager BlackRock, a poster boy of traditional finance, has since emerged as a saviour of sorts for the world’s largest cryptocurrency.
The tantalising prospect of a BlackRock-backed spot bitcoin exchange-traded fund (ETF), which would give every traditional investor the chance to trade bitcoin on public exchanges, has galvanised bitcoin’s spot price in recent weeks.
A 17-month high of $35,280 was achieved on 24 October, and while the BTC/USDT pair has reverted to a sideways trade since, it is still in a stronger position than many were expecting.
At the time of writing, BTC/USDT was swapping for $34,300, having posted incremental gains over the weekend before dipping slightly in this morning’s opening trades.
Bitcoin price chart
Bitcoin remains nearly  20% higher over six months – Source: tradingview.com
The recent surge in bitcoin spot prices does not have the strongest of foundations, being built on hype and speculation more than anything.
These ETF applications from BlackRock, not to mention Grayscale, Ark Invest, WisdomTree and others, are still fighting for approval from US regulators.
Bitcoin could therefore be in an oversold position right now, though on the bullish front, Binance’s BTC/USDT order book shows substantial buying support at the $34,000 price point, ostensibly marking out a solid support line.
The strength of this bitcoin support might be tested when the US Federal Reserve makes its interest rate call on Wednesday.
Consensus has the Fed holding at 5.5%, but an upside surprise, or even a hawkish tone to the Fed’s outlook, could weigh on bitcoin and other risk assets.
Ethereum (ETH), the second-largest cryptocurrency on the market, is looking particularly volatile as the ETH/USDT pair trades above and below the 200-day moving average trendline.
Sunday trades were positive for ether, adding around one percentage point, with further gains this morning pushing ETH/USDT above $1,800.
Week on week, bitcoin is 12.2% higher compared to ether’s 8% gains.
In the broader altcoin space, Solana (SOL) and Cardano (ADA) are leading the blue chips, each posting around 12% of gains week on week, with BNB and Ripple (XRP) adding low single digits.
Global cryptocurrency market capitalisation currently stands at $1.26 trillion, with bitcoin dominance at 53.8%.
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