Bitcoin Hits $42K - The Crypto Bull Market Arrives?

4 Dec 2023 by Rory Kejzekro 3 min read

Is the bull run really underway?...

Well, that’s what many are suggesting as Bitcoin (BTC) recently surged to its highest price level since April 2022 (i.e. 20 months ago). More specifically, the world’s largest cryptocurrency pumped to $42,160 on Monday 4th December, marking year-to-date gains of over 152%.

Bitcoin Pump - Crypto Causes

As intuition would suggest, a pivotal driving force behind Bitcoin’s recent rally has been the confirmation of the Spot Bitcoin ETF approval window, which per the US Securities and Exchange Commission (SEC), is scheduled for January 5-10 2024.

Another crypto-native factor to consider is the recent closure we’ve received regarding FTX, Binance, and their contentious founders. Although the latter’s case is yet to be properly closed due to ongoing investigations from the SEC, many suggest that with their debacles (and fate) now largely resolved, market sentiment has reached a higher equilibrium due to more regulatory clarity being present.

On the charts side of things- and per data from CoinGlass - Bitcoin’s pump came amid crypto exchanges liquidating crypto perpetual futures positions worth $220 million over the weekend. Bullish long positions also accounted for nearly 85% of the tally.

Over $120 million worth of Bitcoin shorts - referring to bets against price rises - have been liquidated since Friday. Elsewhere, open interest in the crypto grew 6% on Monday, as traders increased leveraged positions to bet on further volatility.

However, as an outlier, crypto exchange BitMEX saw its Bitcoin open interest spike 90% within hours from $200 to $420 million on Saturday, which indicated that a large player had opened massive bets on the platform. With this in mind, there are suggestions that Bitcoin’s recent rally comes as part of a new ‘bull trap,’ which consists of whales luring-in bid liquidity by giving bullish investors the impression that stock prices are going to rise. In reality however, any upward movement is short-lived and quickly overtaken by bearish activity, causing traders who bought into the bull trap to lose money.

As of the time of writing, BTC is trading at a price of $41,631.10 (per CoinMarketCap).

Macroeconomic Factors

When it comes to the macroeconomic factors in play, Bitcoin’s price pump comes in anticipation of the Federal Reserve (FED) cutting borrowing costs.

As history tells us, price pumps for assets such as Bitcoin and gold are often the case when rate reductions are made, with the first set to arrive as soon as March 2024. This is essentially what we’ve seen in reality, as in addition to Bitcoin bullishness, gold momentarily pumped to $2,135.39 an ounce on Monday, surpassing its previous August 2020 all-time high.

Closing Thoughts

Many tout $42,000 as one of Bitcoin’s most important price levels, as it represents the initial rejection price of January 2021, which saw BTC/USD rise sharply in wake of Tesla adding Bitcoin to its balance sheet.

When it comes to other support and resistance level prices to look out for, there’s $31,860, $28,050 and $25,200… and more optimistically, $48,240, $51,790, and the all-time high of $69,000.

As we hope to move through these different support levels as the bull run ramps up, we can also expect many altcoins to follow suit. Again, this is something we came to witness in recent days, as Ethereum (ETH) - the second most actively traded cryptocurrency - rose 8.3% to $2,260 on Monday, reaching its highest level since May 2022.

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