Bitcoin soared above $41,000, continuing its 2023 surge driven by expectations of interest rate cuts and potential demand from the exchange-traded funds (ETFs) sector. The cryptocurrency saw a substantial 5.1% surge to reach $41,746, marking a 152% jump since the start of the year, levels not seen since April 2022 before the TerraUSD collapse triggered a significant digital asset downturn.
Other cryptocurrencies like Ether and Dogecoin also experienced upward movements, with the top 100 crypto coins showing a collective rise of over 4%.
Investor sentiment is pivoting towards the belief that the Federal Reserve is done with rate hikes, prompting attention on the anticipated scale of future cuts in borrowing costs. This shift in market dynamics has triggered a broad rally across global markets.
Anticipation surrounds ETF approvals, with expectations of several US spot Bitcoin ETFs, potentially led by BlackRock Inc., securing Securities & Exchange Commission (SEC) approval by January. Analysts note that Bitcoin’s trajectory may target $42,330 as the next significant level, highlighting ongoing optimism about SEC approval and prospective Fed rate cuts in 2024.
Despite regulatory challenges, Bitcoin’s resurgence after the 2022 crypto crash demonstrates resilience. However, the possibility of a reset in rate projections or complications with ETFs pose risks. Some indicators suggest Bitcoin’s rally may be overstretched, such as the weekly relative-strength index (RSI) signaling “overbought” conditions.
Amid such volatility, the upcoming Bitcoin halving, expected to reduce miner rewards, serves as a potential sentiment booster. Some experts predict Bitcoin could rally towards $50,000 before a significant correction, emphasizing the impact of the halving and US monetary policy on its trajectory.
While Bitcoin has outperformed global stocks and gold in 2023, it remains below its all-time high of nearly $69,000 in November 2021. The positive movement in the crypto market has also uplifted related stocks in Asia and the US, including Monex Group, Woori Technology Investment Co., Coinbase Global Inc., and MicroStrategy Inc., which has significantly increased its Bitcoin holdings.
