As the Crypto Fear & Greed Index hits a high, Bitcoin's price surges with the potential approval of BlackRock's spot Bitcoin ETF and increased demand from U.S. investors.
The cryptocurrency market is experiencing a significant upswing, with Bitcoin at the forefront. The Crypto Fear & Greed Index, a measure of market sentiment, has reached its highest point since November 2021, when Bitcoin's price hit $69,000, as reported by CoinDesk. The index currently stands at 72 out of 100, indicating a state of "greed" in the market.
Bitcoin recently experienced a 14% daily gain, its largest single-day rally in over a year. This surge in sentiment follows excitement over the potential approval of BlackRock's spot Bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission. The relative strength index (RSI) for Bitcoin also indicates an overbought condition, often a precursor to a pause in a bull market.
Bitcoin spot exchange-traded funds (ETFs) could potentially attract significant inflows. Galaxy Digital estimates that these could reach $14.4 billion in the first year. The US wealth management industry is seen as the most addressable market for Bitcoin ETFs, with potential inflows of $27 billion in the second year and $39 billion in the third year. ETFs offer advantages over existing investment products like trusts and futures, including lower fees and greater accessibility.
Bitcoin's recent rise is largely attributed to U.S. investors buying ahead of the potential approval of a spot Bitcoin ETF. This indicates that U.S. institutions and investors are embracing the news of an imminent U.S.-listed spot Bitcoin ETF. The total crypto market cap has surpassed $1.25 trillion, with a significant increase in trading volume.
While the potential ETF approval has certainly played a role in Bitcoin's rally, other factors are also at play. These include Bitcoin's constrained supply, its status as a safe haven asset, and its use as a hedge against devaluing fiat currencies, rising debt levels, and geopolitical tensions. The recent banking crises in the US and China may have also contributed to Bitcoin's rise.
Bitcoin's price has doubled from recent lows, reaching nearly twice its previous price in 2023. The fixed supply of 21 million Bitcoin and the halving event contribute to its appeal. Adoption and increased demand for Bitcoin could lead to higher prices. Furthermore, Bitcoin Ordinals (NFTs) and BRC-20 tokens are bringing new functionality to the Bitcoin network through inscriptions, allowing data storage on the blockchain.
Arthur Hayes, former CEO of BitMEX, believes that Bitcoin is facing a "trigger" moment that could lead to a $1 million price tag. This prediction is based on the risk of escalation in global conflicts, US Federal Reserve's inflation concerns, and the borrowing needs of the US war machine.