Short sellers caught off guard, Bitcoin breaks through $47,000 in a short period of time to hit a 20-month high

Boosted by the sentiment surrounding the approval of the U.S. spot Bitcoin ETF, Bitcoin broke through $47,000 during the U.S. stock trading session on Monday, hitting a nearly 20-month high. The last time BTC traded at more than $46,000 was in April 2022.

Data from Bitpush Terminal showed that the price of Bitcoin exceeded $47,000 at around 2:15 p.m. Eastern Time on January 8, with a 24-hour increase of 6.85%.

Crypto-related stocks also rose in response. Coinbase edged up nearly 2%, Iris Energy and Marathon Digital rose more than 7%, Riot Platforms rose 6%, and CleanSpark rose 5%.

According to Coi nglass data, the 24-hour liquidation of Bitcoin short positions exceeded $89 million, and this number is still increasing as of press time. The total amount of crypto short liquidations across the entire network exceeded $150 million.

As the market eagerly awaits the SEC’s decisions on multiple ETF applications, expectations are high for its profound impact on institutional participation and overall market dynamics.

The rally came as BlackRock , Grayscale and other potential bitcoin ETF issuers submitted final updates to the SEC , including key fee disclosures, boosting investor confidence in the likelihood of approval. The SEC’s deadline to approve or reject an ETF is approaching on Wednesday, and industry experts widely expect the agency to approve several applications at once to level the playing field.

“This is a price war where multiple applicants are launching nearly identical commoditized products and the only way they can compete is on price,” Jim Angel, associate professor at Georgetown University’s McDonough School of Business, told CNBC.

“Approval is inevitable. There’s nothing left to decide… This is a big step forward not only for bitcoin but for the entire financial industry,” Jay Clayton, former chairman of the U.S. Securities and Exchange Commission, said on CNBC’s “Squawk Box” on Monday.

Optimism surrounding Bitcoin pushed Ethereum up 3%. Several companies vying for a Bitcoin ETF have also submitted applications to launch a spot Ethereum ETF, with a deadline for a resolution coming later this year.

Is $50,000 Bitcoin’s Next Short-Term Target?

Crypto analyst Arslan Ali noted on the X platform that key technical indicators show that Bitcoin’s medium-term support point is at $45,900. Immediate resistance is at $48,420, followed by $50,000 and $51,375, marking potential obstacles for further price gains.

In case of downside consolidation, the support level is $44,520, followed by $42,925 and $41,500, which are likely to provide support on any pullback.

Additionally, Bitcoin’s relative strength index (RSI) is currently at 76, indicating that the asset is overbought. Such high RSI levels often indicate that a price correction may be imminent.

Joel Kruger, market strategist at LMAX Group, released a report saying that if the SEC actually approves the ETF, the announcement could push up the price of Bitcoin. Kruger said: "Approval could trigger a 10-15% rally driven by sideline capital. If it is not approved, the forecast suggests that there may be a correction, but strong support is expected above $30,000."

A report released today by Standard Chartered Bank shows that spot Bitcoin ETFs could bring in up to $100 billion in new capital inflows throughout 2024, causing Bitcoin prices to reach $200,000 by the end of the year.

Matrixport believes that Bitcoin may fall and consolidate again because there are signs that "smart" funds are again under selling pressure and the funding rate is weakening. The recent market adjustment may not completely eliminate the downside risk, and BTC may retest the price range of $36,000 to $38,000.

Arthur Hayes, founder of BitMEX , believes that the approval of a spot Bitcoin ETF could send Bitcoin soaring to $70,000. However, he made a cautious prediction of a sharp correction that would follow. Hayes said that a "healthy" 20% to 30% retracement from the price in early March is reasonable, and if Bitcoin hits the $60,000 to $70,000 range in the coming weeks, the decline could be as high as 40%. He further predicted that Bitcoin would initially experience a sharp decline along with the broader financial markets, but would rebound again before the Federal Reserve's interest rate meeting due to its status as a "neutral reserve hard currency."

Although predictions for price movements vary, analysts agree that both institutional and retail investors have high demand for Bitcoin ETFs and are optimistic about their adoption prospects. ETF expert Nate Geraci expects that spot Bitcoin ETFs will surpass all previous ETF issuance records. Galaxy Digital estimates that the potential market size of the U.S. Bitcoin ETF in the first year after its launch will be approximately $14 trillion, expanding to $26 trillion in the second year and $39 trillion in the third year.