Prices of nearly all major cryptoassets traded higher today, as sentiment among market participants improved following a Russian idea (a very preliminary one) of accepting bitcoin (BTC) for oil & gas, news that an oil giant is mining BTC, and speculations that a bitcoin spot-based exchange-traded fund (ETF) could launch next year. Moreover, Terra has also started implementing its USD 10bn BTC plan, helping to push the price higher.
However, the question remains how sustainable this upward move is.
At the time of writing (14:47 UTC), BTC was up 4% for the past 24 hours and almost 10% for the past 7 days, trading at USD 44,886. Meanwhile, ethereum (ETH) stood at USD 3,175, also up 5% for the past 24 hours and almost 13% for the week.
The current bitcoin price is down from a high of just over USD 45,000 earlier in the day, the highest price for BTC since it briefly traded above the key level on March 2.
Bitcoin spot ETF in 2023?
The respectable performance for the two largest cryptoassets comes as Eric Balchunas, senior ETF analyst at Bloomberg, shared insights from a report that argued a ‘spot bitcoin ETF’ that holds actual bitcoin instead of futures contracts could be approved in the US by the summer of 2023.
According to the report, which Balchunas shared a screenshot of on Twitter, a change of the definition of ‘exchange’ by the US Securities and Exchange Commission (SEC) could bring crypto exchanges under the SEC’s jurisdiction.
“After that (which could take a year) look for ETFs to get green light,” the analyst wrote.
Russian BTC roulette
Also adding to the bullish sentiment is a report of a senior Russian lawmaker who appeared open to the idea of selling Russian oil for bitcoin or national currencies of countries deemed as “friendly” to Russia.
“We have been proposing to China for a long time to switch to settlements in national currencies for rubles and yuan. With Turkey, it will be lira and rubles,” Pavel Zavalny, the chair of Russian Duma’s energy committee, said in an interview with Rossiya Segodnya, before adding:
“If [trade needs to be done in] bitcoin, we will trade in bitcoin.”
Asked by CNBC about the potential use of bitcoin by Russian entities to avoid sanctions, US Treasury Secretary Janet Yellen did not directly address the issue, but admitted that “crypto has grown by leaps and bounds.”
She added that the asset class “is playing a significant role, not so much in transactions, but in investment decisions of lots of Americans.”
Exxon Mobile expands bitcoin mining pilot
Further, a report from Bloomberg on Thursday revealed that the American oil & gas giant Exxon Mobile has been mining Bitcoin using excess natural gas as its power source, and that it is now looking to expand the operation.
The mining is part of a pilot project that launched in North Dakota’s Bakken region in early 2921, with an expansion now planned for Alaska, the Qua Iboe Terminal in Nigeria, Argentina’s Vaca Muerta shale field, Guyana and Germany, the report said, citing “people familiar with the matter.”
Excess natural gas is usually burned off on site – what’s known as flaring – but Bitcoin mining has proven to be a viable way to make use of the otherwise wasted energy. (Learn more: Two Texans Use Flare Gas to Net USD 4M on Bitcoin Mining, Plan USD 20M in 2022)
A bitcoin ‘decoupling’
Commenting on the current state of the market, the popular on-chain analyst Willy Woo said that “macro headwinds” and bitcoin fundamentals are now pointing in opposite directions.
With spot demand for BTC continuing to climb, and a return to more demand for bitcoin futures, he said the market is now “fully reset” and added that “accumulation has already happened.”
“Probably a decoupling will continue,” the analyst said, sharing on-chain data to back up his thesis.
Meanwhile, funding rates on bitcoin futures over the past 8 hours did not offer any clear direction of where the price might be headed, with rates on most exchanges staying around zero, according to data from Coinglass.
A funding rate around zero indicates a neutral market sentiment, while positive rates are usually seen during periods of rising prices and negative rates are seen during periods of falling prices.
Also, some industry players are saying that this recent upward move might not be sustainable for now. However, a rally can’t be ruled out also.
“Bitcoin has no real catalyst to push it higher,” Leah Wald, CEO at digital-asset investment manager Valkyrie Funds, told Bloomberg, adding that the momentum is still “slowly building for another rally, even if this is not being reflected right now in price action.”
“If we end the year around USD 40,000, I wouldn’t complain at all, I would be pretty happy,” Mati Greenspan, Founder and CEO of Quantum Economics, added, noting that a run toward USD 60,000 or USD 70,000 is still possible.