Market update: is Bitcoin on the way to $50k or retracement first?

Bitcoin finally stalls following five successive days of gains totaling +-16% and coming within a whisker of the $45k mark. The performance of Bitcoin and the crypto industry in 2023 continues to surprise given the challenges being faced by the industry over the past 18 months.

The world’s largest cryptocurrency is approaching $1T in market cap and is up 180% since November 2022. The 45% of that growth has been recorded over the past six weeks as speculation continues to grow regarding the spot Bitcoin ETF. As things stand, based on the Grayscale Bitcoin Trust's NAV discount, which has narrowed dramatically, the market assigns a probability of around 90% that the Securities and Exchange Commission will approve such a vehicle.

The crypto industry as a whole is benefitting at present having added approximately $750 billion of market cap since November 2022. Looking at the crypto heatmap below and surprisingly the major cryptos appear to be experiencing a lull today which could also be down to some profit taking following the recent rally, while altcoins continue to rise with avalanche up as much as 11%+ on the day.

Crypto market chart

Crypto industry resilience

If the last 24 months have proven anything it's that crypto is here to stay. Having faced unprecedented challenges and many powerful and vocal proponents to its uses and use cases with the latest being JPMorgan CEO Jamie Dimon, who stated he is deeply opposed to crypto. His argument being the same as countless others who attribute crime, money laundering and tax evasion which is ironic considering the US dollars role in crime across the globe. A story for another time.

Of course, Bitcoin does have its vocal supporters with the likes of ARKS Cathy Wood and MicroStrategy founder Michael Saylor. The failure of US banks this year may have been a blessing in disguise for the crypto industry. There are still clouds hovering over the industry, but this is becoming a normality with market participants hardly taking notice anymore, or so it may seem.

BlackRock announce seed funding for Spot ETF of $100k which is small but it is just a first step with cash likely to change hands a lot quicker once an approval occurs. This shows commitment by BlackRock is ensuring that they are ready for a potential approval.

Bitcoin price outlook

From a technical standpoint BTCUSD is approaching a key area of resistance around the $45k mark. However, options markets are hinting that Bitcoin will hit $50k by January with the Spot Bitcoin ETF expected to be approved early in January as well. The question I am grappling with is what will come first? A test of the $50k mark or the spot Bitcoin ETF approval?

Open interest for Bitcoin $50,000 strike calls is massive, as displayed in the chart below with options also suggesting the recent rally is just the beginning.

Open interest chart for Bitcoin

Resistance levels:

• 45000
• 47500
• 50000

Support levels:

• 42500
• 40000
• 38590

BTCUSD daily chart

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