Rise on Bitcoin Spot Exchange-Traded Fund (ETF) Launch Prospects
Contrasting Movement with Nasdaq Falling Due to Rising Treasury Yields
The price of Bitcoin, the leading virtual asset, is soaring. It has surged more than 30% over the past month. This contrasts with the stagnant Nasdaq index, which is technology stock-centered and has shown synchronization in the past. As Bitcoin's price growth rate surpasses Nasdaq, investor interest in virtual assets is increasing.
According to the global virtual asset market tracking site CoinMarketCap, as of 12:39 PM on the 26th, Bitcoin's price was recorded at $34,827 (approximately 47.32 million KRW), up 1.32% from the previous trading day. A month ago, on the 26th of last month, Bitcoin's price was around $26,200 and had been fluctuating between $26,000 and $27,000 since then. However, starting from the 16th, the price began to rise steadily, reaching $34,400 on the 24th, the highest level since May last year.
With this upward trend, Bitcoin's price has also surpassed the Nasdaq index, which had shown synchronization. Classified as a risky asset, Bitcoin's price and the Nasdaq index have historically moved in similar patterns in response to changes in economic variables such as benchmark interest rates and inflation. However, recently, they have been moving according to separate issues. According to data from investment information provider Investing.com, the Nasdaq index closed at 13,271.32 on the 25th of last month (local time). It rose to 13,659.68 on the 11th of this month but then declined. It fell to 12,983.81 on the 20th and recorded 12,821.22 as of the 25th. The index declined due to rising concerns about tightening amid persistently high inflation, with the 10-year U.S. Treasury yield surpassing 5%, causing a sharp rise in interest rates.
While the Nasdaq index is declining due to rising Treasury yields, Bitcoin's price is showing a completely different pattern thanks to the positive news of the launch of a Bitcoin spot exchange-traded fund (ETF). On the 16th of this month, when the price surge began in earnest, it jumped 10% in about 10 minutes. Virtual asset specialized media reported that the U.S. Securities and Exchange Commission (SEC) had approved BlackRock's Bitcoin spot ETF, which triggered this rise. However, the SEC later clarified that this was "groundless," revealing the report to be false. The market is highly sensitive to the approval of the spot ETF, and despite the false report, Bitcoin's price only slightly declined after the initial surge.
Since then, market expectations for the approval of the Bitcoin spot ETF have grown, pushing Bitcoin's price into the $34,000 range. If the spot ETF is approved, it is analyzed that institutional funds will flow into the virtual asset market, acting as a positive factor. ETFs can be relatively easily incorporated into institutional portfolios. Moreover, since institutional funds managed through stocks, retirement accounts, and others can flow into Bitcoin, this could have a significant long-term impact on the price.
Sehee Kim, a researcher at Eugene Investment & Securities, explained, "Despite the false report about the Bitcoin spot ETF last week, Bitcoin's price has been steadily rising, indicating that expectations for the Bitcoin spot ETF are already reflected." She added, "Expectations for the Bitcoin halving scheduled for April next year are also contributing, so we judge it to be in a rising trend. Although temporary volatility may occur due to high expectations, the possibility of further decline is limited."
Meanwhile, there is also analysis that the war between Israel and the Palestinian armed group Hamas is a positive factor. Bitcoin is being recognized as a safe asset. Previously, when the war between Russia and Ukraine broke out and the value of currencies like the ruble plummeted, Bitcoin was noted as a store of value.
Investor sentiment toward virtual assets has improved to a level of greed. According to data from Alternative, a virtual asset data provider, the Fear & Greed Index, which indicates investor sentiment as an index, was 71 points (greed), down 1 point from 72 points (greed) the previous day. Compared to 52 points (neutral) a week ago, it rose 19 points, and compared to 46 points (fear) a month ago, it increased by 25 points. Alternative's Fear & Greed Index means that a score closer to 0 indicates extreme fear and pessimism about investment, while a score near 100 indicates optimism.
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