Why Is Bitcoin Going Up? (2024)

Bitcoin (BTC) is continuing its recent trend upward today. The original cryptocurrency is up nearly 6% over the past 24 hours and 15% over the past week.

Today’s gains bring bitcoin’s total year-to-date return to nearly 70%. However, at just over $70,000, it still remains below its all-time high of more than $73,000 set in March.

Bitcoin’s bullish week began largely as a result of the softer-than-expected April inflation data. But it continued due to renewed optimism surrounding the possible approval of spot Ethereum exchange-traded funds, or ETFs.

Indeed, Ethereum (ETH) has been gaining too. ETH is up a whopping 23% over the past 24 hours. The leading altcoin is now worth more than $3,800, which is a significant gain but still shy of its all-time high set in November 2021.

Why Is Bitcoin Going Up Right Now?

Bitcoin’s latest price increase is largely in sympathy with Ethereum, as the second-biggest cryptocurrency received some good news yesterday.

On Monday, reports began circulating that the U.S. Securities and Exchange Commission, or SEC, has asked various issuers for updates related to their spot Ethereum ETF applications. These reports have stoked investors’ optimism for an approval, as many believed the ETFs were headed for rejection due to the seeming lack of interest from the SEC.

This type of inquiry from the SEC is reminiscent of the type of interactions between the commission and issuers leading up to the approvals of 11 spot bitcoin ETFs, which occurred in January 2024.

The first spot Ethereum ETF decision is expected on Thursday for investment management firm VanEck, with several others to follow this year. Investors should keep a close eye on these decisions, as they will have a significant impact on bitcoin and the broader crypto market for the rest of 2024.

Spot Bitcoin ETFs Have Sent BTC’s Price Soaring

In the wake of the SEC’s approval of the first U.S. spot bitcoin ETFs, BTC has jumped from under $50,000 at the time of approval to above $70,000 today.

Just as many investors expected before the SEC green light of spot bitcoin ETFs in January, opening the world’s oldest cryptocurrency to institutional investors has provided a significant price catalyst.

For example, BlackRock’s iShares Bitcoin ETF (IBIT), one of the 11 new spot bitcoin ETFs, purchased more than $778 million worth of BTC on March 11 alone. That added up to 12,600 bitcoins flowing into IBIT’s coffers, which reduced the world’s total available supply. Also, with the help of rising demand, IBIT’s purchase increased BTC’s overall value.

Mikkel Morch, founder of digital asset fund ARK36, said in a statement, “The positive momentum in the cryptocurrency space is further bolstered by the impact of spot bitcoin ETFs in the U.S.A., with very substantial funds continuing to flow in. This development, alongside the U.K.’s regulatory advancements, shows the growing recognition of cryptocurrencies . . . by Western financial authorities.”

Is Bitcoin Facing a Price Correction?

With the heights bitcoin has now reached, the fear of a price correction is percolating in some traders’ minds. Although bitcoin has been climbing steadily since the U.S. introduced spot bitcoin ETFs, cryptocurrencies, including bitcoin, have a history of extreme volatility.

Bitcoin and other cryptocurrencies suffered after a wave of bankruptcies, collapses and negative rulings rocked the crypto world in 2022.

First there was Terra’s LUNA coin debacle, which kicked off a crypto winter in May 2022.

After a brutal summer that year for crypto investors, the collapse of leading crypto exchange FTX the following November looked like a fatal blow for cryptocurrencies.

During that period, bitcoin dropped from its pre-crypto-winter high of nearly $65,000 to a bottom near $16,000 before rebounding.

Then, throughout 2023, both the SEC and the Commodity Futures Trading Commission brought numerous regulatory lawsuits against some of the largest crypto exchanges and companies. Those suits hampered many exchanges and other crypto companies’ abilities to do business in the U.S., the world’s largest economy.

What Does Bitcoin’s Bounce Mean for Investors?

Although bitcoin appears to be in the midst of a significant bull run, there is of course no way to know how high the cryptocurrency will go before seeing another correction.

While it’s looking more and more like bitcoin is on a long-term rise again, traders in BTC and other cryptocurrencies are in unprecedented territory regarding several factors. Those include the geopolitical climate, economic indicators, crypto regulation and the Fed’s intentions regarding interest rates.

Cryptocurrency industry investors have learned that even in the best of times, predicting the short-term price action of digital assets is difficult. That holds particularly true in this market environment.