Bitcoin has held firm above the $43,000 mark, marking its longest winning streak since May, triggering discussions about whether this surge reflects bets on a more lenient monetary policy from the Federal Reserve.
The leading digital asset enjoyed six consecutive days of gains, totaling a 16% increase until Tuesday, and is currently consolidating these gains in early European trading on Wednesday. Its impressive 163% rebound from last year’s crypto downturn is catching attention.
The rally is largely tied to expectations of the US approving its first spot Bitcoin exchange-traded funds (ETFs), a move that could broaden investor participation. Key players like BlackRock Inc. and Fidelity Investments await the verdict on their applications, with analysts predicting potential approval by January.
However, speculation surrounding ETFs has loomed over Bitcoin since June when fund managers began seeking approval. This raises questions about whether the recent surge in the token’s value is now linked more to bets on potential Fed rate cuts in the coming year.
“Is the ETF narrative fully priced in?” questioned Tony Sycamore, a market analyst at IG Australia Pty. He noted that the heightened volatility and sharp ascent of Bitcoin could indicate its heightened responsiveness to Fed policy shifts compared to other asset classes.
Despite concerns, the current momentum of Bitcoin continues to overshadow worries about an overextended surge. Smaller cryptocurrencies like Avalanche and meme-favorite Dogecoin are also witnessing gains.
Internationally, Bitcoin is trading about 4% higher on South Korean exchanges Upbit and Bithumb, reviving the “kimchi premium” seen during the pandemic-driven digital asset surge. Meanwhile, in the Middle East, Phoenix Group Plc, a crypto mining hardware retailer, soared 35% in its debut in Abu Dhabi, marking the region’s first crypto-related listing.
Additional factors boosting sentiment include the upcoming Bitcoin halving, scheduled for next year, which will reduce the number of tokens miners receive. This event, recurring every four years, is a key part of the strategy to cap Bitcoin’s supply at 21 million tokens, historically driving record highs after each halving.
“Both small-scale and large-scale factors are aligning favorably for Bitcoin,” commented Zach Pandl, managing director of research at Grayscale Investments LLC, a crypto fund provider.
As of the latest update, Bitcoin experienced a slight dip to $43,525 in London trading, remaining below its 2021 peak of nearly $69,000 by approximately $26,000.
