Bitcoin has surged to $40,000 for the first time since May 2022, marking a significant milestone for the largest digital asset. This impressive rebound is driven by expectations of interest-rate reductions and increased demand from exchange-traded funds.
The token saw a 1% increase, reaching $40,005 on Monday in Singapore, with a 142% jump in 2023. The last time Bitcoin hit $40,000 was before the TerraUSD stablecoin collapse, which caused a turmoil in the digital asset market.
Investors are growing more confident that the Federal Reserve will halt rate hikes as inflation eases, shifting attention to potential rate cuts next year. This shift in the economic landscape has sparked a rally across global markets.
The digital-asset industry is eagerly anticipating the approval of applications from companies like BlackRock Inc. to introduce the first US spot Bitcoin ETFs. Bloomberg Intelligence predicts that a wave of such funds will receive Securities & Exchange Commission approval by January.
Market analyst Tony Sycamore from IG Australia Pty notes that “Bitcoin continues to be supported by optimism around SEC approval for an ETF and Fed rate cuts in 2024.” He also points out that technical chart patterns indicate $42,330 as the next key level to watch for.
Despite facing regulatory crackdowns and legal troubles, Bitcoin’s rebound from the 2022 crypto crash remains resilient. Optimists believe that the industry’s efforts to crack down on questionable practices and the surge in ETF applications signal the maturation of the digital asset market and the potential for expanding the investor base.
While there is a positive sentiment in the market, potential setbacks could arise from a shift in rate expectations or unexpected hurdles for the ETFs. However, for now, the overall mood is optimistic. Furthermore, the upcoming Bitcoin halving in the next year, which will decrease the reward for Bitcoin miners, is seen as a contributing factor to the positive sentiment.
Bitcoin, along with other major tokens such as Ether and BNB, is still below the all-time highs achieved during the crypto bull run of the pandemic era. The largest token reached almost $69,000 in November 2021.
©2023 Bloomberg L.P.
