4-12-2023 (SAN FRANCISCO) In a notable resurgence, Bitcoin breached the $40,000 threshold for the first time since May 2022, riding on the wave of expectations surrounding interest rate cuts and increased demand from exchange-traded funds (ETFs). The largest digital asset displayed its upward momentum by adding approximately 1%, reaching $40,005 during Monday’s trading session in Singapore. This surge contributed to a remarkable 2023 jump of 142%.
Bitcoin’s return to the $40,000 mark marks a significant milestone, considering the tumultuous events that followed the collapse of the TerraUSD stablecoin, triggering a broader downturn in digital assets back in May 2022. The subsequent chain of collapses in the crypto sector created a challenging environment for the cryptocurrency, and the recent resurgence underscores its resilience.
Investors are now adjusting their expectations on the Federal Reserve’s stance, with a growing conviction that the era of rate hikes may be behind us. As inflation shows signs of cooling, the focus shifts to the anticipated extent of cuts in the coming year. This shift in the economic landscape has contributed to a rally across global markets, providing further support for Bitcoin’s upward trajectory.
The digital-asset industry is on the edge of its seat awaiting decisions on applications from major players like BlackRock Inc. seeking approval to launch the first US spot Bitcoin ETFs. Bloomberg Intelligence anticipates that a batch of such funds could secure approval from the Securities & Exchange Commission by January. The potential approval of these ETFs is a key driver of optimism within the market.
According to Tony Sycamore, a market analyst at IG Australia Pty, Bitcoin’s positive momentum is sustained by the hopeful outlook regarding SEC approval for an ETF and anticipated Fed rate cuts in 2024. Technical chart analysis points to $42,330 as the next significant level to monitor, as predicted by Sycamore.
Bitcoin’s recovery from the crypto crash of 2022 has endured challenges, including a US crackdown resulting in the imprisonment of Sam Bankman-Fried for fraud at FTX. Additionally, major players like Binance and its founder, Changpeng Zhao, faced legal repercussions and substantial fines. Despite these obstacles, optimists view regulatory interventions as necessary steps towards industry maturation and the potential expansion of the investor base for digital assets.
While potential disruptions in interest rate adjustments or unforeseen complications with ETFs could pose risks to Bitcoin’s current momentum, the prevailing market sentiment remains positive. A noteworthy factor bolstering this sentiment is the impending Bitcoin halving scheduled for next year. This quadrennial event, reducing the rewards for Bitcoin miners, is part of the strategy to cap the total Bitcoin supply at 21 million tokens. Historical trends indicate that Bitcoin has achieved record highs following each of the last three halving events.
However, it’s worth noting that both Bitcoin and other smaller tokens such as Ether and BNB are still some distance away from their previous all-time highs, which were reached during the crypto bull run of the pandemic era. Bitcoin’s record peak, for instance, was almost $69,000 in November 2021.
