Bitcoin’s ETF-induced spike comes in wake of short squeeze … – Seeking Alpha


Bitcoin's (BTC-USD) impressive double-digit rally on Tuesday, amid growing confidence in the approval of an exchange-traded fund that invests directly in the token, comes as investors scrambled to cover their short positions.

The highest-profile cryptocurrency (BTC-USD) briefly exceeded $35K for the first time since May 2022 late Monday night, before pulling back some to $33.6K on Tuesday at 11:46 a.m. ET. That brings BTC's year-to-date surge to roughly 102%.

For the short squeeze, bitcoin (BTC-USD) experienced $275.5M in short liquidations on Sunday, followed by another $118.4M Monday, crypto data provider CoinGlass.

The outsized short covering comes as BlackRock's (BLK) iShares Bitcoin Trust has been listed on the Depository Trust & Clearing Corp., with the ticker IBTC, Matteo Greco, research analyst at digital asset and fintech investment firm Fineqia International, wrote in a note.

"Additionally, Blackrock updated its filings with the SEC, indicating their readiness to seed their ETF starting from October 2023. This proactive approach from Blackrock suggests their preparedness to initiate trading promptly upon receiving approval from the SEC, further substantiating the optimistic sentiment surrounding an impending approval," he added.

All this considered, BTIG thinks the $38K-$40K range is in view for bitcoin (BTC-USD), which is still well below its record high of nearly $69K in 2021.

Unsurprisingly, crypto-exposed stocks also caught a bid, including: MicroStrategy (MSTR) +8.4%, Coinbase (COIN) +8.2%, Galaxy Digital (OTCPK:BRPHF) +11.8%, Core Scientific (OTCPK:CORZQ) +10.7% and CleanSpark (CLSK) +9.1%.

Needham analyst John Todaro reckons a combination of the spot BTC ETF optimism and the dynamics around the impending halving event would boost the volatility in crypto-focused stocks.

"We believe bitcoin needs to rally above ~$50k by Q2 '24 or high-cost bitcoin miners will need to reduce hash power, which will likely lead to revenue estimates coming down," he wrote in a note.

Rangebound bitcoin (BTC-USD) prices, however, would lead to a further reduction in volumes and adversely impact exchanges and brokerages like Coinbase (COIN) and Robinhood (HOOD), he contended.

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Bitcoin's ETF-induced spike comes in wake of short squeeze ... - Seeking Alpha

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