On Monday, Bitcoin experienced a significant increase, momentarily exceeding the $42,000 mark for the first time since April 2022. This upswing in value is attributed to speculations about potential cuts in U.S. interest rates and the anticipation of the U.S. authorizing Bitcoin-focused exchange-traded funds (ETFs).
The leading cryptocurrency reached a peak of $42,162 on Monday, the highest since April 2022, indicating a recovery from the downturn that affected the crypto markets after the collapse of FTX and other cryptocurrency business failures in the previous year. By 1256 GMT, Bitcoin’s value was recorded at $41,754, marking an increase of 4.4% for the day.
Justin d’Anethan, the head of business development for Asia-Pacific at Keyrock, a digital assets market-making firm, observed that Bitcoin’s 50% rise since mid-October signifies a significant shift from the negative trends of 2022 and early 2023. He noted that despite the possibility of future dips, the low of around $16,000 hit a year ago likely represented the nadir of Bitcoin’s value.
So far this year, Bitcoin has surged by more than 150%. Microstrategy, a major Bitcoin investor, revealed last week that it had acquired an additional $593 million worth of Bitcoin in November.
Other riskier investments and assets sensitive to interest rates, like gold, have also seen considerable gains recently. This trend is fueled by market expectations that the U.S. Federal Reserve is done with rate hikes and might initiate rate cuts in early 2024.
Optimism in the sector was further bolstered by reports in October indicating that the U.S. Securities and Exchange Commission (SEC) would not contest a court decision which found the agency erred in rejecting a Bitcoin ETF application. This development has increased expectations for the eventual approval of such a fund.
Geoff Kendrick, head of digital assets research at Standard Chartered, attributed Bitcoin’s recent rise primarily to the anticipated approval of spot Bitcoin ETFs in the U.S., which he expects to occur in the first quarter of 2024. He also pointed out that lower Treasury yields are contributing to Bitcoin’s appeal, as it is considered “the ultimate long duration asset.”
The crypto community has also reacted positively to the resolution of a long-standing U.S. criminal investigation into Binance, the largest global crypto exchange. The settlement, which involved Binance founder Changpeng Zhao pleading guilty to violating U.S. anti-money laundering laws and stepping down, enables Binance to continue its operations.
Ether, the cryptocurrency associated with the Ethereum blockchain network, also saw a rise in value on Monday, reaching $2,274.
Despite these increases, both Bitcoin and Ether are still significantly below their all-time highs of $69,000 and $4,868, respectively, achieved in 2021.
