• Bitcoin jumps above 47,000 to its highest in a month

  • BlackRock and Fidelity ETFs have stellar debut month

  • Market focus turns on halving event

 

Bitcoin set to erase post-ETF slump

In the past two weeks, Bitcoin has been in a steady recovery from its 2024 low of $38,460, which was the region that put an end to the price’s post-ETF selloff. Following a consolidation period around the 50-day simple moving average (SMA), the king of cryptocurrencies exploded higher, eyeing the $48,000 mark on Friday.

Although the latest advance does not have a clear catalyst, there is a range of factors backing it. Firstly, the relentless rally observed in equity markets has dragged digital assets higher, with the S&P 500 touching the crucial 5,000 psychological mark for the first time ever. That being said, Bitcoin remains way beneath its historical high of $69,000, suggesting that it could serve as an attractive alternative for risk-seeking investors who believe that the rally in equities is starting to look overdone.

Furthermore, Bitcoin has been popular in periods of stress in the traditional banking system such as the regional banking crisis in March 2023. Over the past 10 days, New York Community Bancorp’s stock has lost more than 50% of its value and dropped to its lowest in 20 years after the financial institution reported higher-than-expected losses from real estate loans. Therefore, Bitcoin might have enjoyed some buying activity from algorithms on the back of the increasing woes surrounding banks with exposure in commercial real estate.

Focus shifts on halving

Despite benefitting from the risk-on sentiment in markets and other external factors, Bitcoin experiences its largest moves from idiosyncratic developments such as the approval of spot ETFs or the recurring blowups of over-leveraged exchanges in 2022. The fact that BlackRock’s and Fidelity's spot Bitcoin ETFs have accumulated more assets in their debut month than any other US ETF in 30 years is a clear example of the rising interest in the sector.

As the ETF dust settles though, investors are rotating their interest towards the upcoming halving event, which will take place in April. With Bitcoin mining rewards cut in half, there will be substantial changes in the supply dynamics as many Bitcoin miners might run out of business due to no longer being profitable.

Fresh highs in sight?

BTCUSD is clearly on track to erase its post-ETF slide, with the price trading in striking distance from the two-year peak of $49,051 on Friday. However, given the aggressive advance, Bitcoin could easily experience a pullback in the case that it fails to storm to fresh highs.

To the upside, Bitcoin bulls might attack the two-year high of $49,051 ahead of the $50,000 psychological mark.

Alternatively, should the price reverse lower, the December resistance of $44,785 could now serve as support. In case of a downside violation, the price may face the inside swing low of $41,420.