Why did the Bitcoin price just hit a 17-month high?

The long-standing cryptocurrency is finding its feet to reclaim a price not seen since May 2022.

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The Bitcoin (CRYPTO: BTC) price has come alive over the past 20 days. After over seven months of bobbing between US$25,000 and US$30,000, the renowned cryptocurrency has surged through the glass ceiling to its highest level in roughly 17 months — as illustrated below.

Data by Trading View

The blockchain-based currency is currently valued at US$35,610. In the space of 20 days, renewed buying pressure has pushed the Bitcoin price up approximately 33%. As a result, the decentralised token has now appreciated 74% over the past 12 months.

Is there something to explain the rapid resurgence?

BlackRock comes a-knocking as halving approaches

Many people within the crypto community believe the uptick in the Bitcoin price is connected to BlackRock's submission to the US Securities and Exchange Commission (SEC) for a spot Bitcoin exchange-traded fund (ETF).

For some background, BlackRock is a multinational investment company with more than US$8 trillion (with a 'T') in assets under management. Hence, crypto investors are excited about the potential legitimacy and capital that BlackRock could bring to Bitcoin.

There are a couple of important distinctions to be made with a spot Bitcoin ETF that separate it from other existing investment vehicles, these being:

  • A spot ETF invests directly in the underlying asset, not derivative contracts or other complicated financial instruments
  • A spot Bitcoin ETF would trade like any other ETF, allowing investors to gain exposure by buying shares through a traditional exchange

The enthusiasm quickly picked up recently after the ticker 'IBTC' appeared on the website of a US clearinghouse before being removed. Many speculate this apparent error suggests an imminent approval for BlackRock's ETF — though yet to be confirmed.

At the same time, the next Bitcoin halving is drawing closer, now an estimated 175 days away. The programmed event takes place every four years, resulting in the Bitcoin mining reward halving (hence the name).

The thinking goes: if supply (mining rewards) is reduced while demand remains the same, the Bitcoin price may rise. Historically, the value of Bitcoin has experienced a surge following the halving, as shown in the X post below.

If all goes to plan, the block reward will reduce from 6.25 Bitcoin to 3.125 Bitcoin on 25 April 2024.

Is there a short squeeze on the Bitcoin price?

As some optimism returns to the cryptocurrency, some may wonder whether a short squeeze could transpire. Alex Thorn, head of firmwide research at Galaxy Digital, believes it could be possible.

According to a post on X, Thorn outlined that if the Bitcoin price moved to between US$35,750 to US$36,000, shorters could be on the chain for around $20 million of Bitcoin for each 1% increase in price.

Not all agree, though, with Blockworks CEO Lachlan Feeney suggesting a short squeeze is "unlikely at this stage".

Motley Fool contributor Mitchell Lawler has positions in Bitcoin. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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