Bitcoin surged past the $40,000 mark, marking its first ascent to this level in the year. This rally is propelled by several factors, including positive sentiment regarding U.S. interest rate reductions and the expected approval of U.S.-stockmarket traded bitcoin funds.
Reaching $41,522 on Monday, Bitcoin hit its highest value since April 2022, signaling a departure from the market’s previous downturn following the collapse of FTX and other crypto-related businesses in 2022.
According to Justin d’Anethan, Head of Business Development for Asia-Pacific at Keyrock, the substantial 50% surge in mid-October suggests a notable shift away from the pessimism that marked 2022 and early 2023. He noted increased institutional buying in November, indicating a renewed phase of interest. While some reversals could occur, the lows witnessed around $16,000 a year ago likely represented the bottom.
Microstrategy, a significant Bitcoin investor, revealed a recent purchase of an additional $593 million in bitcoin during November, underscoring growing institutional interest.
Simultaneously, riskier investments and assets sensitive to interest rate changes, like gold, have seen strong rallies, driven by market expectations that the U.S. Federal Reserve will cease raising rates and might begin cutting them in early 2023.
Reports in October suggested that the U.S. Securities and Exchange Commission would not contest a court ruling against its rejection of an exchange-traded fund (ETF) application. This development bolstered expectations for an eventual ETF approval, potentially drawing cautious investors into the crypto market via the stock market.
Ether, linked to the Ethereum blockchain, also surged, reaching $2,253 on Monday, marking its highest value in 1-1/2 years.
Despite these surges, both bitcoin and ether remain below their record highs set in 2021, surpassing $60,000 and $4,000, respectively.
