Bitcoin’s Emergence as a Potential $40,000 Asset: 4 Key Reasons Behind Its Rally

The Bitcoin Rally: Assessing the Current State

Currently, Bitcoin (BTC) is trading at $36,550 with a 2% loss in the last 24 hours. This comes after a week of similar losses throughout the cryptocurrency market, with Solana (SOL) being a notable exception.

BTC’s price trends to the upside on the daily chart. Source: BTCUSDT on Tradingview

Behind Bitcoin’s Surge

A report from Deribit Insight, authored by Markus Thielen, outlines the four key driving forces behind the Bitcoin price surge. These forces, despite recent market action, continue to play a significant role in shaping the Bitcoin landscape.

Quote: “The forces remain intact despite the recent price action.”

SEC’s Decision On The Bitcoin ETFs

One significant driving force is the anticipation surrounding the SEC’s approval of a spot Bitcoin ETF. The uncertainty surrounding this decision has led to fluctuations in implied volatility, influencing Bitcoin’s value.

Leveraged Positions and Futures Market

Another key factor is the demand for leveraged positions in Bitcoin, primarily through perpetual futures markets, which indicates a strong interest in trading the BTC/USDT pair. Additionally, the BTC options market saw an uptick in realized volatility, signaling risk appetite for investors.

BTC’s Realized Volatility returns to a 5-year average. Source: Deribit

Influx of Fiat Via Stablecoins

A substantial fiat inflow into cryptocurrencies, mainly through Tether’s USDT, indicates fresh capital entering the crypto space. This influx has had a notable impact, especially on altcoins, reflecting growing investor confidence.

Increased Bitcoin Network Activity

The fee generation within the Bitcoin network signals heightened activity, reaching $54 million. This growth in network usage, partly driven by the resurgence of Ordinals and support from major exchanges, underscores the fundamental strength of the Bitcoin ecosystem.

Quote: “Bitcoin’s journey remains captivating as it navigates regulatory decisions, market strategies, and evolving investor sentiment.”

Cover image from Unsplash, chart from Tradingview

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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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