Bitcoin-led crypto bull run: Unraveling reasons for the $36k rally and subsequent plunge

After months of bearish sentiment, a Bitcoin-led crypto bull run swept over the market on Nov 9, 2023, propelling BTC/USD past the $36,000 mark. Several other crypto tokens also saw an increase in prices, drifting the bullish sentiments of the crypto market even further. The crypto market cap graph overall showed a positive trend, with all the indicators green, and the highest push came from Bitcoin. 

However, the BTC/USD prices rose to an intra-day high of $38,000 before retracing below $37,000. This subsequent plunge raised questions about the sustainability of the rally. In this post, we analyze the factors that led to Bitcoin’s bull run and the subsequent plunge, and determine if another rally is coming.

What led to the November 9 crypto bull run?

BTC/USD price on Nov 9, 2023, during Bitcoin’s bull run
Source | BTC/USD price on Nov 9, 2023, during Bitcoin’s bull run

Bitcoin’s bull run can be attributed to a combination of factors, including anticipated crypto ETF approvals in the US, steady crypto regulations, and investor sentiments. Let’s unravel the reasons behind the Bitcoin rally that spiked the crypto market cap graph.

Spot crypto ETF anticipations:

Bitcoin’s bullish trend may have been driven by investors’ anticipation of upcoming crypto exchange-traded funds (ETF) approvals by the United States Securities and Exchange Commission (SEC). The SEC window to approve the 12 outstanding ETFs was opened on Nov 9, which drove this anticipation. A group of Bloomberg analysts also revised their ETF estimates, releasing a research note predicting a fast approval

As a result, even now, the crypto market is brimming with possibilities of US regulators approving the crypto ETFs very soon. If approved, the ETFs could drive the crypto market cap graph upwards. In fact, according to capital market company Galaxy Digital, there will be a 74% increase in BTC in the first year of an ETF approval (using a 9/30/23 BTC price of $26,920 as the starting point).

Expected rise in BTC/USD in the 1st year following an ETF approval
Source | Expected rise in BTC/USD in the 1st year following an ETF approval

Steady crypto regulations:

Crypto regulations worldwide have seen steady progress recently, contributing to increased institutional interest in crypto. The European Union, for example, has been working on a comprehensive crypto regulatory framework to be finalized in 2024. This framework is expected to provide clarity and certainty for investors in the European Union. 

Hong Kong also released a new crypto regulatory framework in June 2023, allowing retail crypto trading for the first time. On the other hand, Japan has declared crypto a legal property under Japan’s Payment Services Act (PSA), requiring crypto exchanges to register and comply with anti-money laundering rules.

Similarly, many other countries and jurisdictions have already developed or are in the works of developing regulations to boost the crypto market. As such, optimism related to crypto regulations may have contributed to this recent Bitcoin-led crypto bull run.

Investors Sentiments:

On Nov 2, Cryptosphere’s Fear & Greed Index, a barometer of investor sentiment, registered a score of 72, indicating high levels of “greed” among investors in the crypto market. It was the highest level of “greed” sentiment recorded since November 2021, when Bitcoin hit its all-time high of $69,000. This shift in market sentiment has historically led to price rallies, as it did this time.

Cryptospehere’s fear and greed index showing ‘greed’ sentiment in the crypto market before Bitcoin’s bull run
Source | Cryptospehere’s fear and greed index showing ‘greed’ sentiment in the crypto market before Bitcoin’s bull run

Support by crypto holders:

According to a recent report by Glassnode, long-term crypto holders may have also played a role in the Bitcoin rally. The report suggested that Bitcoin is in the accumulation phase, and its supply has reached a new historical low. With a tightened supply, available Bitcoin is being purchased by smaller, long-term holding entities. The report highlighted that the bullish conviction of long-term holders and the accumulation of Bitcoin among most investors had led them to buy up “92% of the newly mined supply.” 

The supply being held by long-term crypto holders indicated a bullish signal for crypto. Hence, it was followed by a bullish run.

The reasons for the price swing of Bitcoin on November 9 are complex and multifaceted. However, the abovementioned factors are likely to have played a significant role.

What led to the plunge following the crypto bull run?

A subsequent plunge followed the Bitcoin rally. The drop may have been caused by several reasons, including:

  • Profit booking: Following the increase in BTC/USD price, some investors who had previously purchased Bitcoin at lower levels may have chosen to sell their holdings at higher levels to secure profits. As a result, the supply of Bitcoin may have increased, leading to a subsequent decline in its price due to the increased selling pressure.
  • Overbought conditions: Overbought conditions may have also contributed to the pullback. Overbought conditions occur when an asset’s price has increased rapidly and is believed to be due for a pullback. Technical analysts may have identified overbought conditions in Bitcoin and decided to sell their holdings, putting downward pressure on the price.

It’s difficult to pinpoint which factor caused Bitcoin’s price plunge, but these factors can be accounted for. 

Future outlook with Bitcoin on the rise

The Bitcoin-led crypto bull run and the subsequent plunge is a stark reminder of the crypto market’s volatility. With Bitcoin on the rise, retail and institutional investors’ anticipations have been captured. Whether this bullish trend will prevail next year remains to be seen. However, the general long-term outlook for Bitcoin remains bullish, given the much anticipated Bitcoin halving in 2024.

The optimism around the crypto market is a testament to its high potential! A beginner-friendly crypto exchange like Millionero can help you get started on your crypto trading journey.

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