Bitcoin has surpassed $40,000 for the first time this year, riding a wave of momentum on widespread excitement over U.S. interest rate cuts and as traders anticipate the imminent approval of U.S. exchange-traded bitcoin funds.
The world’s largest cryptocurrency hit $41,522 on Monday, its highest level since April 2022, appearing to shake off the funk that had settled over crypto markets since the collapse of FTX and other crypto deal failures in 2022.
A 50% rally since mid-October “seemed to mark a decisive shift away from the bearishness of 2022 and early 2023,” said Justin d’Anethan – head of business development for Asia-Pacific at Keyrock, a digital asset market-making firm.
He said evidence of institutional buying through November shows a new leg of interest and that while reversals ahead are not inconceivable, the lows hit around $16,000 a year ago “probably marked the bottom.”
Bitcoin investor Microstrategy (NASDAQ:MSTR) announced last week that it bought an additional $593 million of bitcoin in November.
Meanwhile, riskier assets and other interest-rate-sensitive assets such as gold have also rallied sharply in recent weeks as markets bet that the Federal Reserve has finished raising interest rates and will begin lowering them in early 2023.
Reports in October that the U.S. Securities and Exchange Commission won’t appeal a court ruling that found the agency was wrong to deny an ETF application have also fueled bets that approval is imminent.
A spot bitcoin ETF could allow previously wary investors to access crypto via the stock market, ushering in a new wave of capital into the sector.
Ether, the coin linked to the Ethereum blockchain network, also hit a 1-1/2 year high on Monday, hitting $2,253.
Both bitcoin and ether remain well below their record highs in 2021, which were above $60,000 and $4,000, respectively.
