Bitcoin has surpassed $40,000 for the first time since May 2022, riding a wave of positive sentiment fueled by expectations of U.S. interest rate cuts and optimism about the approval of U.S. stock market-traded bitcoin funds.
The cryptocurrency reached a high of $41,748 on Monday, marking a significant rebound from the challenges faced by the crypto market following the collapse of FTX and other crypto businesses last year.
Bitcoin’s current value is $41,627, reflecting a 50% increase since mid-October.
This rally signals a shift away from the bearish trends of 2022 and early 2023, according to Justin d’Anethan, Head of Business Development for Asia-Pacific at Keyrock, a digital assets market-making firm.
Evidence of institutional buying in November indicates renewed interest, and while some reversals are possible, lows around $16,000 a year ago likely marked the bottom.
Bitcoin has surged by over 150% in 2023, with Microstrategy, a prominent Bitcoin investor, revealing a $593 million purchase in November.
Additionally, riskier investments and interest-rate sensitive assets like gold have also experienced strong rallies, as markets speculate that the U.S. Federal Reserve will cut rates in early 2024 after finishing rate hikes.
Positive developments include reports in October that the U.S. Securities and Exchange Commission won’t appeal a court ruling against rejecting a bitcoin exchange-traded fund (ETF) application.
This news has fueled expectations of an eventual ETF approval, potentially opening doors for hesitant investors to access crypto through the stock market.
The resolution of a U.S. criminal probe into Binance, the world’s largest crypto exchange, has further boosted investor confidence.
Binance’s founder, Changpeng Zhao, stepped down after pleading guilty to violating U.S. anti-money laundering laws. The settlement allows Binance to continue its operations.
Ether, the cryptocurrency linked to the Ethereum blockchain, also reached a 1-1/2 year high at $2,264 on Monday.
Despite these positive trends, both bitcoin and ether remain below their record highs from 2021, which were $69,000 and $4,868, respectively.