Bitcoin went up by 12% in June due to an increase in BTC spot ETF proposals.
The price of Bitcoin has been increasing lately after a long period of inactivity. Since the beginning of June, Bitcoin has gone up by 12% and is expected to continue on an upward trend.
Last week, Bitcoin reached a value of $28,000 after a 5% increase on Tuesday. Many experts believe that BlackRock’s application for a Bitcoin ETF played a significant role in this increase. BlackRock had submitted an application for the iShares Bitcoin Trust ETF the week before.
Another factor that may be responsible for the rise in Bitcoin’s price is the recent surge in Bitcoin ETF applications submitted to the United States Securities and Exchange Commission (SEC). Companies such as WisdomTree, Invesco, and Bitwise have submitted applications. However, the SEC has rejected all spot Bitcoin applications since the Winklevoss Bitcoin Trust filed the first proposal in 2013.
Despite the SEC’s reluctance, there is a continued demand for spot Bitcoin ETFs from institutions and traditional firms. Brent Xu, the CEO and co-founder of DeFi platform, Umee, believes that these institutions are interested in having a large exposure to digital assets. He also believes that their client bases are pushing for access to Bitcoin.
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Liquidity May be Responsible for Bitcoin’s June Climb
Interestingly, the rise in Bitcoin’s price in June may not only be due to ETF applications and traditional interest. There is also a problem with market depth.
Market depth is the ability of a market to absorb large market orders without significantly impacting the asset’s price. When market depth is low, there could be a substantial price shift in response to relatively large orders. Bitcoin’s market depth is low at the moment. According to data from Kaiko, Bitcoin has lost 20% of its market depth since January. In March, its market depth fell by nearly 40%.
CCData head of research, Jamie Sly, believes that Bitcoin’s June climb is due to the market’s inability to absorb orders. Sly said:
“Bitcoin’s recent surge in value has largely been driven by large trades within a less liquid market…Our analysis of market orders over 5 BTC reveals an aggressive surge in market buying, suggesting large players are seeking to gain exposure to digital assets…When combining large orders with thin books, the market is subject to more volatile movements.”
At the moment, trading volumes across crypto exchanges are low. CoinGecko data shows that the trading volume is nearly $24 billion, down from over $100 billion during the 2021 crypto rally. Bitcoin traded at around $69,000 then, compared to the current price above $30,000.
The low trading activity and lack of participation from retail traders may be due to the SEC’s recent actions against crypto giants. The Commission has launched lawsuits against Binance and Coinbase, accusing them of violating US laws on trading and operations.
