After a 15% jump in two weeks, Bitcoin is at $121,800. This is a breath away from hitting the $122K mark. What’s behind it? A perfect storm of Bitcoin ETF hype, cooling inflation, and fresh waves of institutional buying. The frenzy surrounding potential Bitcoin ETFs has been a significant driver of this increase.
The push came when a major Wall Street asset manager applied for a Bitcoin ETF. This made it appear that the SEC may in fact approve multiple applications this quarter. That one action turned caution into full on FOMO. Hedge funds and asset managers jumped in. They increased allocation to both Bitcoin and Ether. They bet big that we are at the start of the next bull market, anticipating a positive outcome in the realm of Bitcoin ETFs.
Inflation Eases, Risk Appetite Soars
Then at a surprising turn of events, U.S. inflation in July dropped to 3.1%, below what the markets had predicted. For crypto traders, this was not just good news. It was a green light. The drop in the CPI numbers reported that the Federal Reserve may moderate its aggressive rate increases. As seen in the CME FedWatch Tool, this in turn made high-risk assets like crypto very attractive to investors looking at Bitcoin ETFs as viable options.
Trading volumes tell the story: Bitcoin is seeing daily trade volume break the $50B mark, a level we haven’t seen since the late 2021 peak. Also, we saw Bitcoin break above the 200-day moving average at $98K. This was a major resistance, and it in turn has opened the door to the $125K target, fueled in part by the optimism around Bitcoin ETFs.
Ether, on the other hand, was in no way following in the footsteps of Bitcoin. It went past $4,30 at the peak, a level not seen since May 2020. This was in the wake of increased DeFi action and very positive reports leading up to the so-called Paris+ upgrade of Ethereum. The upgrade is set to see a reduction in ETH issuance and at the same time improve the system’s scalability.
Bull Run Or Bull Trap?
For now, market sentiment is electric. Analysts like Jane Li of SilverGate Capital report on how ETF approvals will see increased institutional investment. This, in turn, will push prices up. Also, Dr. Omar Patel of Consensus Labs is of the opinion that Ethereum’s network upgrades are putting in place the structure for long-term price growth. Greater adoption of DeFi is anticipated. The anticipated growth due to Bitcoin ETFs is a central theme in these analyses.
But the rally is at the same time a risky play. Technical indicators say that the market is at overbought levels, which in turn means a short term correction. Regulatory uncertainty is also present, particularly concerning ETF approvals. The chance of a surprise inflation bounce back or the Fed turning out of the blue can change the bull run story.
Still, at the drop of a hat, if the ETFs hit the market before a major turnaround, we may see Bitcoin go past the mark of $125K. Ether may rise to $5K, which may just be the start of crypto’s big explosive stage. What the coming weeks will do is determine if we have a breakout, or the very big bull trap of recent years. This is greatly influenced by the prospects of Bitcoin ETFs.
