Bitcoin’s Soaring Surge: Projected 2023 Doubling and Surpassing $35,000 Mark

The price of bitcoin briefly exceeded $35,000, marking its highest level since May 2022. This surge was driven by positive sentiment regarding a bitcoin exchange-traded fund and a flight to safety that resulted in a spike in short liquidations.

According to Coin Metrics, bitcoin was trading at around $33,900.00 with an 8% increase on Tuesday. On Monday night, it reached as high as $35,113.29, its highest point since May 8, 2022. Bitcoin has seen a 104% increase from the beginning of the year and a 105% increase from its lowest point in 2022.

This rally may be fueled, in part, by investors who were betting against bitcoin rushing to cover their short positions. This phenomenon, known as a short squeeze, resulted in $275.45 million in short liquidations on Sunday and an additional $100.44 million on Monday, as reported by crypto data provider CoinGlass.

“The unexpected surge in bitcoin’s price, pushing it above $34,000, was primarily caused by the $167 million in short liquidations, primarily on offshore exchanges,” stated Ryan Rasmussen, an analyst at Bitwise Asset Management, in an interview with CNBC. “Investors who had shorted bitcoin at levels above $33,000 are now feeling the pain of this surprise.”

This significant move of a 10% increase in bitcoin’s price, the first since March 14, has also positively impacted the rest of the cryptocurrency market. Ether and Ripple’s XRP both experienced a 4% rise, while Solana token saw a 3% increase. Crypto equities, such as Coinbase and Microstrategy, also witnessed gains of 10% and 12%, respectively. The mining stocks had notable double-digit growth, with Marathon Digital gaining 12% and Riot Platforms advancing 10%.

Last week, the SEC chose not to appeal a court ruling within Grayscale’s lawsuit, raising hopes for the approval of a bitcoin-related ETF in the coming months. Momentum has been building as firms running the bitcoin ETF made updates to their filings and influential investors like Cathie Wood and Mike Novogratz highlighted the shift in the SEC’s tone towards a more positive engagement with the industry.

A bitcoin ETF would provide investors with an avenue to participate in bitcoin’s price movements without direct ownership of the cryptocurrency itself. As bitcoin is deemed highly volatile and unpredictable, this type of investment option would be considered safer.

Leading financial institutions like BlackRock, Invesco, Fidelity, and Grayscale have been advocating for bitcoin ETFs and have submitted applications to offer these investment options. They portray bitcoin ETFs as safer alternatives to direct investments in cryptocurrencies, which are known for their speculative nature and price volatility.

Coinbase expressed confidence to CNBC that a U.S. bitcoin exchange-traded fund will eventually receive approval from the SEC.

The cryptocurrency industry is closely following these developments, which could potentially signal a comeback for the sector.

Over the past year, the crypto industry has faced scandals and significant events such as the bankruptcy of FTX and the charging of Terraform and its CEO Do Kwon for defrauding investors in February.

In November 2021, the price of bitcoin reached an all-time high, surpassing $65,000. However, a year later, the value plummeted to around $16,000 due to the collapse of Sam Bankman-Fried’s crypto exchange FTX, which led to its bankruptcy.

The SEC has been cracking down on crypto firms, with companies like Coinbase and Ripple being involved in lawsuits pertaining to violations of securities laws. These firms, along with others in the crypto industry, have criticized the lack of clarity around crypto regulations in the U.S. and even threatened to leave the country as a response to the SEC’s enforcement actions.

— CNBC’s Ryan Browne contributed to this story.