Bitcoin crosses $28,000 for the first time since May; what is behind this surge?

Crypto traders and enthusiasts can now heave a sigh of relief as flagship asset, Bitcoin has crossed the $28,000 mark, for the first time in six weeks. 

Recall that Bitcoin, alongside the general crypto market, has been on a downward spiral, fueled by the not-so-positive effect of the regulatory hurdles between America’s Securities and Exchanges Commission and industry giants, Binance and Coinbase.

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Now this fresh upside which is propelled by a smattering of news seen as bullish for the industry can renew investor confidence in the market.

Bitcoin on the rise

For the first time in over six weeks, Bitcoin is trading at $28,906, up 7% in the last 24 hours and recording an 11% increase in the past week. The crypto last traded above $28,000 on May 30, and last closed above that level on May 7, according to Coinmarketcap data.

Also, Bitcoin currently has a 50% market dominance for the first time in months, indicating that the cryptocurrency now accounts for half of the total crypto market cap, valued at $1.14 Trillion. 

The second largest cryptocurrency, Ethereum is also enjoying a 4.8% gain in the past 1 day to sit at $1,811 at press time. Other altcoins enjoying market momentum include Cardano (ADA), Polygon (MATIC), Litecoin (LTC), and Avalanche (AVAX).

This indicates that all losses from the SEC-induced dump on June 14 have now been recovered.

What is behind this rally?

A prominent global asset manager, BlackRock, filed for a Bitcoin Exchange Traded Fund (ETF) with the United States Securities and Exchange Commission (SEC). This move which signals growing institutional interest has boosted investors’ confidence upon announcement, causing Bitcoin’s price to surge above $28,000.

Basically, a Bitcoin exchange-traded fund (ETF) mirrors the fluctuations in its price, granting investors exposure to the cryptocurrency without requiring direct acquisition. The entry of a traditional finance company such as BlackRock, with a market capitalisation of $105.25 billion, according to Yahoo Finance, into the realm of cryptocurrency carries immense significance.

A Bitcoin ETF would be good news for investors as it provides an easy, secure, and regulated way to invest in Bitcoin and diversify their portfolios. Additionally, an ETF will likely attract more institutional investors who were previously hesitant about getting into crypto because of custody and regulatory concerns.

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The buzz surrounding the Bitcoin ETF continues to intensify, with additional news emerging that Fidelity Investments, an asset management powerhouse with assets totalling $4.5 trillion, is seeking a regulatory license to provide crypto custody services.

With that enormous value, industry experts believe that this ETF application will be accepted within a short time, despite the high number of ETF rejections usually dished out by the SEC. Note that this will be the first-ever spot market Bitcoin ETF certified by the SEC if approved. 

What should be expected next?

Bitcoin’s recent breakout is undoubtedly a positive sign for the cryptocurrency market, suggesting that the previous bearish trend may end. However, there is still a significant amount of resistance to overcome before the breakout can be fully confirmed. 

In simpler terms, this recent development has led many to speculate that a major bullish trend is on the horizon, with the potential for a big green candle shortly.

However, despite the fact that the market appears to be poised for a major rally, with institutional investors and retail traders eagerly seeking to capitalise on the trend, it is important to note that the newly formed bull run is in its early stages because there is still uncertainty about the sustainability of this momentum.