ALBAWABA – Bitcoin broke above $40,000 for the first time in 2023, riding the wave of hopes that the United States (US) Federal Reserve (Fed) will cut interest rates as early as March 2024, as traders anticipate the imminent approval of US-stock market traded bitcoin funds.
The world's biggest cryptocurrency its highest levels since April 2022 on Monday, according to Reuters, having seemingly overcome the setback since FTX and other crypto-business collapsed in 2022.
A recent rally in the markets, since mid-October, indicates a decisive shift away from the conservative, bearish attitude in 2022 and early 2023.
Stocks worldwide have seen their best month this year in November, with Wall Street, European, Asia-Pacific and British markets all surging, including China’s property stocks.
Bitcoin rose as much as 5.1 percent, Bloomberg reported, up to a new high of $41,746 in early trading hours in London, before edging slightly lower around $41,500 later in the day.
Overall, Bitcoin has jumped 152 percent in 2023.
According to Bloomberg, smaller tokens and cryptocurrencies such as Ether and meme-crowd favorite Dogecoin also pushed higher. A gauge of the largest 100 crypto coins added more than 4 percent.
Meanwhile, riskier investments and other interest-rate sensitive assets, such as gold, have also rallied hard over the last few weeks as markets wagered on sooner-than-expected rate cuts.
Also adding to the optimism are reports in October that the US Securities and Exchange Commission will not appeal a court ruling in favour of Bitcoin exchange-trading funds. The ruling found that the agency was wrong to reject an exchange-traded fund application of Bitcoin.
Bitcoin's value has also been driven by the supply crunch expected next year because of an event called "halving" - Shutterstock
A spot bitcoin ETF could give previously wary investors access to crypto via the stock market, facilitating the entry of a new wave of capital into the cryptomarket.
Ether, the coin linked to the Ethereum blockchain network, also hit a 1-1/2 year high on Monday, hitting $2,253.
Both bitcoin and ether remain well below their 2021 record highs, at over $60,000 and $4,000, respectively, but a US trading approval will likely reignite the market.
Notably, Bitcoin had hit $69,000 back in 2020, according to Agence France-Presse (AFP).
This anticipated approval will allow the creation exchange-traded funds (ETFs) for Bitcoins, thus allowing broader trading of the cryptocurrency, which could see another rally lifting the cryptocurrency to or beyond previous highs.
The digital asset's value has also been driven by the supply crunch expected next year because of an event called "halving".
Bitcoins are created – or "mined" – as a reward when powerful computers solve complex problems, as explained by AFP. But the amount of bitcoin is limited and every four years, the reward is halved. The next "halving" is due in May 2024.
