Vanguard and BofA, good news for expanding cryptocurrency accessibility… Expecting additional rebound due to short liquidation and ETF fund inflow
Bitcoin rapidly rebounds to 2-week high…short sellers ‘panic’
View enlarged image
Bitcoin attempted a sharp rebound on the 3rd (local time), jumping to its highest level in two weeks.
Amid growing expectations that the U.S. Federal Reserve will cut the benchmark interest rate next week, the buying trend of institutional investors and the squeeze demand from short-selling positions combined to lead the price rebound.
Bitcoin came close to $94,000 at one point on this day, soaring more than 8% from its low point earlier this week.
Buying sentiment has been heating up for a long time due to the news that traditional financial companies have begun to lower the structural entry barriers surrounding digital assets.
The day before, Vanguard, the world’s second-largest asset management company, broke away from its previous policy of avoiding cryptocurrency investment for several years and allowed exchange-traded funds (ETFs) such as Bitcoin, XRP, and Solana to be traded on its platform.
In addition, Bank of America (BofA) is said to have established internal guidelines recommending that Merrill Lynch and private bank customers incorporate 1-4% of cryptocurrency proportions. It is reported that BofA plans to begin coverage at the Chief Investment Officer (CIO) level for four types of Bitcoin spot ETFs, including IBIT, Blackrock’s Bitcoin spot ETF, starting early next year.
The prices of major cryptocurrencies, including Ethereum, the second largest cryptocurrency market capitalization, also rose on this day.
Bitcoin suffered a sharp decline immediately after breaking the all-time high of $126,000 in early October, and subsequent attempts to rebound were unsuccessful, leading to an unstable price trend until recently. The overall market capitalization of cryptocurrency has evaporated by more than $1 trillion since early October.
However, in the market, expectations for a Bitcoin rebound are gradually growing due to the resurgence of risk preference.
Chris Beauchamp, chief market analyst at British investment and trading platform IG, said in a report, “Bitcoin investors have no choice but to be cautious about this rally as we have experienced several ‘false rebounds’ in recent months.” He added, “As risk preference is recovering in the stock market, there are signs of it spreading to the cryptocurrency market.”
He added, “Last week’s Bitcoin rebound was blocked at the $93,000 level, but today’s trading is trading above this level again, creating some expectations for a continued further rise.”
Timothy Misir, head of research at BRN, said, “The forced liquidation of Bitcoin short positions amplified the price rise and increased short-term volatility,” and added, “The amount of new funds flowing into Bitcoin this cycle is approximately $732 billion, more than twice the previous cycle.”
Inflow of spot ETF funds is also acting as an additional driving force. According to the statistics of The Block, a blockchain media outlet, the U.S. Bitcoin spot ETF recorded a net inflow of approximately $58.5 million as of the previous day, recording an inflow of funds for five consecutive trading days.
The market is now paying attention to the results of next week’s Federal Open Market Committee (FOMC) meeting.
Cryptocurrency trading company QCP Capital explained in a report that day, “The market appears calm on the surface, but tensions are heightened internally,” and that they are exploring direction ahead of the FOMC meeting scheduled for the 10th.
Reporter Sujeong Lee soojunglee@g-enews.com
[알림] This article is for reference only when making investment decisions, and we are not responsible for any investment losses based on it.
