Bitcoin is again inching closer to a potential price breakout, even as it hovers at its highest point in 18 months.
Markets priced bitcoin (BTC) above $38,600 on Friday morning — up 9% over the past month and more than double since this time last year.
Number-two crypto ether (ETH) is meanwhile playing catch-up. It’s also at its highest point since mid-last year, but trails bitcoin’s returns by nearly half.
The ETH/BTC ratio (the bitcoin cost of ether) has fallen by one-fifth over the past six months. It’s showing signs of closing the gap, however, having regained almost 4.5% in November.
Bitcoin bulls may explain the crypto’s strength with hype around spot bitcoin ETFs — like the one BlackRock wants to launch — which could be approved any day now.
Those ETFs will be forced to buy BTC to meet investor demand, representing perhaps billions in upward pressure. They might even reason that the DOJ’s indictment of Binance and CEO Changpeng Zhao gives a certain clarity to the crypto market that can only be good for prices.
Crypto investors could even feel a little floaty due to arrests of hombres like FTX fraudster Sam Bankman-Fried, Terra ringleader Do Kwon and Celsius rabble-rouser Alex Mashinsky.
So, the tide went out, took the bad actors with it and now billions in fresh ETF money might wash ashore, bringing the bull market back along with it, some might say.
Caption: The ETH/BTC ratio has even underperformed BNB over the past year
Bears would say it’s unclear whether ETFs would actually move the needle, considering the relatively small interest in the three spot funds already available to North American investors via Canadian markets.
A fresh wave of spot ETFs could even be bad for bitcoin’s price, especially if Grayscale Bitcoin Trust (GBTC) loses ground to Wall Street operators like BlackRock and Fidelity.
JPMorgan analyst Nikolaos Panigirtzoglou reckons up to $2.7 billion might flow out of GBTC and potentially be dumped on the market.
Still, by some definitions, the bear market is squarely over. That doesn’t explicitly mean the start of a new bull market.
Although momentum does count for something, and if Bitcoin went up in November, could it do the same in December?
It turns out Bitcoin’s price direction in December has matched November 10 times in its 13 years of existence, with only 2011, 2013, and 2014 not aligning — a 77% strike rate, per TradingView data.
That’s more common than with months overall: 94 of the 170 months on record, or 56%, have aligned with the previous month’s candle.
All this is probably statistically insignificant, on par with roulette math, given the small sample size.
But considering the crypto winter we’ve had, markets will take what they can get.