Bitcoin has surged above $40,000, reaching its highest level since April 2022, driven by a combination of factors including optimism about US interest rate cuts and anticipation of the approval of US-stockmarket traded bitcoin funds.
The world’s largest cryptocurrency, Bitcoin, hit $41,522 on Monday, marking a significant turnaround from the challenges faced by crypto markets in 2022.
Justin d’Anethan, Head of Business Development for Asia-Pacific at Keyrock, a digital assets market-making firm, told news agency Reuters that the recent 50 per cent rally in Bitcoin’s price since mid-October is seen as a decisive shift away from the bearish trend observed in 2022 and early 2023.
He added that evidence of institutional buying in November has fueled renewed interest, and while the possibility of reversals exists, the lows around $16,000 a year ago are considered a likely bottom.
It may be noted that Bitcoin investor Microstrategy revealed last week that it purchased an additional $593 million in Bitcoin during November.
The broader market sentiment, buoyed by the expectation that the US Federal Reserve will cut interest rates in early 2023, has contributed to a rally in riskier investments and interest-rate sensitive assets, including gold.
Furthermore, reports in October suggesting that the US Securities and Exchange Commission will not appeal a court ruling favoring a Bitcoin exchange-traded fund (ETF) application have fueled speculation about an imminent approval. The potential approval of a spot bitcoin ETF could open avenues for cautious investors to enter the crypto market through traditional stock channels.