"There are many investors who are like this, when the price has gone up, they scramble to buy."
Immediately after breaking through $40,000, the price of cryptocurrency king Bitcoin (BTC) yesterday finally managed to reach $42,350 as there was panic buying following lower interest rate expectations, BTC ETF spot results and inflows into digital asset funds.
Much of the rise in BTC prices was driven by market watchers expecting the spot BTC ETF in the United States (US) to be approved by the Securities and Exchange Commission (SEC) in early January 2024.
According to Matrixport, which is a crypto service provider, the increase in BTC futures premium compared to the spot price could indicate that FOMO traders, who are afraid of missing out on profits, have been rushing to buy BTC.
Not only that, investors also show no signs of stopping pouring large amounts of money into crypto funds following last week's reported net inflow of $172 million.
Following a series of rather dovish statements by several Federal Reserve (Fed) officials, BTC saw a massive rally as the US dollar weakened further and there was strong domestic data that helped drive prices across the crypto market.
This is because crypto market participants not only expect the Fed to reduce interest rate hikes next year but also an 86% probability for lower funds rates by May 2024.
There is no denying that BTC is already in an upward momentum, but its price may face some short-term obstacles because there are investors who want to enter long positions still expecting the digital asset to go lower.
Another reason for investors to be careful is in relation to the BTC address where approximately 85% are in profit and this means that higher price movements can cause traders to take profit (profit-taking).
As of this writing, BTC price has surged by 2.49% to $1,730 in the last 24 hours with a market cap of $816 billion and is up 12.11% over the past week.
