Bitcoin surges to 20-month high

Crypto markets rallied on Monday, stirred mainly by anticipation of the approval of crypto spot exchange-traded funds (ETF). BlackRock and other institutions have applied for a Bitcoin ETF, which would bring more institutional and retail money into crypto markets. Approval expectations of spot ETFs by the Securities and Exchange Commission (SEC) boosted Bitcoin on Monday and a bullish trend was transferred to other cryptocurrencies. BlackRock has also filed an ETH spot ETF for approval, causing Ethereum prices to surge. 

This coming week anticipation of ETF approvals will reach its peak, as the first SEC decisions are expected by the end of the week. Final revisions from exchanges that have filed proposals for SEC approval were handed in on Monday as the process for spot Bitcoin ETF launch is being finalized. At least 10 companies amended and updated their Bitcoin ETF applications for SEC approval on Monday, raising expectations that the first approvals will be granted by the end of the week.

Bitcoin price surged to the $47,000 level on Monday for the first time since April 2022. If BTC price declines, support can be found near $41,600, while resistance may be encountered near $48,000. 

Ethereum price also rose, climbing to the 2,350 level. If Ethereum's price declines, it may encounter support near $2,180, while if it increases, resistance may be encountered near $2,430.

Crypto markets are under pressure by rising geopolitical tensions. The war between Israel and Hamas is threatening to spill over the Middle East as tensions rise in the Red Sea area. Iran-backed Houthi militants have been attacking commercial vessels in the Red Sea. Concerns that the Geopolitical crisis in the Gaza area may spread to neighboring countries drive risk sentiment down putting pressure on risk assets. 

Increases in central banks’ interest rates are putting pressure on risk assets. Most major central banks, however, are hitting pause on rate hikes, propping up crypto markets. The Fed kept interest rates unchanged at its December meeting, within a target range of 5.25% to 5.50%. The Fed’s forward guidance was more dovish than expected, hinting that the central bank is preparing to pivot to a less restrictive monetary policy. Markets are currently pricing in a 25 bp rate cut in March with over 60% probability, propping up risk assets.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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