Bitcoin price is up today as the crypto community interprets Binance’s resolution with the DOJ as a bullish outcome.
Bitcoin price is up today, rebounding from the Nov. 21 correction to $35,651 and hitting an intraday high of $37,431. The rally comes after Bitcoin price bounced 3% as traders digested Binance’s settlement with the United States Department of Justice (DOJ). The settlement has reignited hype around traders’ belief that a spot BTC exchange-traded fund (ETF) will be approved soon and that this will bring significant inflows to Bitcoin, pushing prices across the crypto market higher.
Let’s look into the reasons why Bitcoin price is up today.
The Binance saga ends with a settlement
Initially, the price of Bitcoin (BTC) flashed mixed signals after Binance co-founder Changpeng “CZ” Zhao’s guilty plea and the DOJ’s $4.3 billion settlement with Binance. After taking some time to digest the outcome, the market began to notice that the Binance exchange was not having a mass exodus of funds like FTX did when its liquidity crisis first became public.
Here's our latest update on @binance, 12 hours after our previous one
At the time of writing, withdrawals are continuing, and we're not seeing a mass exodus of funds
Over the past hour on Ethereum, Binance has a $17M negative netfow (more leaving the exchange than what's… pic.twitter.com/yQPtMl5ue8
— Nansen (@nansen_ai) November 22, 2023
Despite the DOJ settlement, Binance’s Bitcoin reserves are only down 17% from their all-time high. By comparison, FTX BTC reserves were depleted by 99.9% from the all-time high when the exchange experienced a run in November 2022.
While Binance’s Bitcoin reserves are their lowest since 2017, it maintains the largest amount of BTC compared with other centralized exchanges.
#Binance Bitcoin reserve analysis after the settlement with the DOJ.
Is better to make analysis of reserves in relative terms.1. Reserves, which were already declining, are now down 17% from their previous all-time-high, the lowest since 2017.
2. However, Binance’s Bitcoin… pic.twitter.com/lpY2u65V5p
— Julio Moreno (@jjcmoreno) November 22, 2023
Potential spot BTC ETF approval boosts market sentiment
Despite a bevy of macro headwinds, Bitcoin price continues to push higher, achieving a 124% year-to-date gain with volatility increasing. Some Bitcoin analysts believe the Binance-DOJ settlement is bullish for a spot Bitcoin ETF approval, noting a similar deal achieved by Arthur Hayes and BitMEX.
The Bitcoin Fear & Greed Index remained in the “Greed” zon, showing sustained elevated market sentiment versus last month.
After a rush of spot Bitcoin ETF amendments in mid-October, the Securities and Exchange Commission (SEC) has so far refused to approve a spot Bitcoin ETF despite numerous applicants, including BlackRock, Fidelity, ARK Invest and 21Shares.
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After delaying approvals on a Nov. 17 deadline, the SEC’s next deadline is Jan. 10. Both Grayscale and BlackRock executives met with the SEC on Nov. 20 to discuss a spot Bitcoin ETF approval.
According to reports, an approval could generate $600 billion in new demand. CryptoQuant analysts believe that an ETF approval will lead to a $1 trillion increase in Bitcoin’s market capitalization.
Galaxy Digital predicts a 74% price increase in the first year following a spot BTC ETF launch.
Institutional inflows surpass $1 billion
While some investors may be awaiting increased liquidity from approved ETFs, institutional investors have already begun deploying funds to Bitcoin and crypto. According to CoinShares, institutional investors have pushed more than $1 billion into crypto funds in the past year.
Related: Rethinking Bitcoin ‘dominance’ at 51% — A misleading metric?
Of the $1 billion, over $240 million has flowed to Bitcoin specifically. In the past week, $155 million of institutional inflow was for Bitcoin alone.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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