The latest Bitcoin (BTC) rally finally tapped the $42,000 territory, a price not seen by the prime cryptocurrency by market cap for 19 months. Experts believe the spot Bitcoin ETF anticipation combined with prevailing economic conditions are now causing “panic buying” or FOMO over the digital coin.
After clearing the $38,000 barrier last Friday, Bitcoin maintained its momentum towards the $42,000 line this Monday. The surge saw the digital asset climb around 5.8% in just 24 hours.
Bitcoin FOMO at Play
According to Matrixport, many traders rushed to the market due to fear of missing out (FOMO) by the recent spike in Bitcoin price. The crypto investment services provider cited the high level of Bitcoin perpetual futures fees compared to spot price as a reference for its prognosis.
“Traders do not have enough upside leverage, this is the conclusion from the elevated premium that perpetual futures are trading at,” Matrixport reported. The firm noted perpetual futures usually had a 5% to 10% premium, but it observed their fluctuation by 10% to 15% and even at 20% to 30% throughout the year. The surges indicated panic buying from traders either closing their short positions or increasing their leveraged long positions.
The increased buying pressure in Bitcoin bloated the crypto market cap to more than $1.5 trillion, showing a 3% jump in just a day. It’s the first time the market to reached such heights since May 2022 during the Terra collapse. A month before it was also the last time BTC traded at $42,000.
Bitcoin Price Now
As of this writing at 1:00 AM UTC on Tuesday, Bitcoin is trading at around $41,770, displaying a nearly 4% gain in the 24-hour chart and 12% in the weekly. Transaction volume is up by 145% in just a day as $39.55 billion worth of BTC moved along wallets.
During the timeframe, the digital asset traded went between a $39,978 low and a $42,372 high. The rise in prices pushed the market cap of Bitcoin by 3% to $817.25 billion.
The current value is still 39% short from the all-time high witnessed on November 10, 2021. However, there is a growing optimism that it may not be long before Bitcoin could get there.
What’s Pumping BTC?
The expected approval of multiple spot Bitcoin exchange traded funds (ETFs) in the US remains the key driving factor of the BTC pump. If analysts are correct, we may see multiple approvals of these financial instruments between January 5 to 10 next year.
Another narrative at play is the upcoming halving estimated to happen on April 19, 2024. The halving event will cut Bitcoin mining reward by half from the present 6.25 BTC.
The latest factors fueling the crypto community are expectations of lower interest rates and analysts chiming in their $500,000 per BTC forecasts for next year.