Why is Bitcoin price so volatile today?

Bitcoin (BTC) price action and repeated swings at $47,000 reflect traders' decisions on January 9. While the market has benefited from waiting for BTC ETF approval, there are traders who expect the event to buy into the hype. , sell the news style event.

Let's take a look at the reasons why the price of Bitcoin is not fluctuating today.

Spot BTC ETF momentum increases market sentiment

Despite the macro headwinds, Bitcoin prices continue to push higher, with volatility and open interest rising. On January 8, all Bitcoin ETF applicants officially submitted the final step in the process. Now the Securities and Exchange Commission (SEC) is free to approve the spot Bitcoin ETF.

With the revised filing of S-1s due on Jan. 9, former SEC Chairman Jay Clayton said there was nothing left for the SEC to decide and approval was expected.

While some analysts believe Bitcoin's price has broken down to $50,000, BTC has more than doubled gold's 2023 returns and the momentum continues in 2024. MicroStrategy CEO and Bitcoin bull Michael Saylor believes the Bitcoin ETF position will be the biggest to happen across all financials since the S&P 500 was launched.

The positive sentiment surrounding Bitcoin pushed BTC's market cap past Berkshire Hathaway's on December 5, 2023, and remains the 10th-largest asset by this measure. Despite BTC's strength, the SEC continues to act cautiously, on January 6. On January 8, the SEC issued another warning against crypto, although approval seemed imminent.

Related: Cory Clipston warns ‘shitcoin traders' in bull market: X Hall of Flame

According to reports, approval could generate $600 billion in new demand. CryptoQuant analysts believe the approval of the ETF will result in a $1 trillion increase in Bitcoin's market capitalization. Galaxy Digital Space predicts a 74% price increase in the first year after the launch of the BTC ETF. By the end of 2025, Standard Chartered estimates $200,000 per BTC.

Bitcoin ETF applicants have indicated that the final filings required in the space may be the emergence of a “fee war”, the institutions are all trying to be low. The lowest recorded rate was set at 0.2% on January 8.

Payment wars have pushed open interest in Bitcoin futures to a new all-time high on the CME. On January 9, it was over $6.28 billion in open interest.

BTC CME Futures open interest has hit a new all-time high of +$0.85B in the last 4 days.

Open interest now stands at $6.23B heading into spot ETF approvals tomorrow. pic.twitter.com/FV5tAjAqUf

— McKenna (@Crypto_McKenna) January 9, 2024

Bitcoin dominates the income of institutional investors in 2023

While some investors are anticipating the increased liquidity and transparency from the adoption of ETFs, institutional investors have already begun deploying their funds into Bitcoin and crypto. According to CoinShares, institutional investors will push $2.25 billion into crypto in 2023, a 2.7-fold increase in 2022. Full-year institutional revenue is the 3rd largest on record.

Related: How Will Ethereum Price React to Bitcoin ETF Approval?

Of the $2.25 billion pushed into crypto assets by 2023, more than $1.93 billion went specifically into Bitcoin. Total assets under management (AUM) for Bitcoin currently dwarfs other digital assets at $36.17 billion.

Retail Bitcoin interest increases

Institutional investors aren't the only group of investors showing strong interest in Bitcoin. The number of Bitcoin wallets holding non-zero BTC amounts hit an all-time high on January 2nd. There are over 51.6 million Bitcoin wallets holding non-zero amounts.

Not only are there more Bitcoin wallets than ever, but due to consistent month-over-month price growth, the BTC guaranteed cap has increased. Capital gains on Jan. 8 were $436 billion, 7% shy of an all-time high.

While the amount of realized capital has risen, the active supply of bitcoins has decreased relative to the held supply, suggesting that holders have yet to release dormant coins into circulation. As they are coins that have not moved at all in the BTC network, Vaulted Supply tends to outperform long-term holders.

The increase in non-zero wallets, the accumulated supply of Bitcoin and the increased amount of capital indicate strong optimism.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.