In a remarkable start to the new year, Bitcoin has surged past the $45,000 mark, marking its highest value since April 2022. This notable uptrend continues the cryptocurrency’s impressive momentum, with a remarkable 156% gain in the previous year – its most robust performance since 2020. The catalyst propelling this surge is an increasing optimism linked to the potential approval of exchange-traded spot Bitcoin funds, resulting in Bitcoin reaching its 21-month high.
This renewed bullish sentiment propelled Bitcoin to a 21-month high of $45,922, accompanied by a 3.1% spike in value on Tuesday. Nevertheless, it still falls short of its all-time high of $69,000, last attained in November 2021. Simultaneously, the second-largest cryptocurrency, Ether, has also experienced a surge, registering a 91% gain in 2023, reaching $2,386.50 on Tuesday.
The positive trajectory extends beyond individual cryptocurrencies, influencing the performances of crypto-related stocks. Companies like Riot Platforms, Marathon Digital, and CleanSpark witnessed gains ranging from 7% to 10%, following a notable decline on the final trading day of 2023. Software firm and bitcoin investor MicroStrategy recorded a substantial 13.4% increase, while the ProShares Bitcoin Strategy ETF, tracking bitcoin futures, rose by 7.8%.
Overall, market sentiment hinges on the potential approval of a spot bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). The SEC, which previously rejected multiple spot bitcoin ETF applications citing concerns over market manipulation, may reconsider its stance. Indications in recent months suggest a possibility of approval for at least some of the 13 proposed spot bitcoin ETFs, with a decision expected in early January.
Analysts, including Matteo Greco of digital asset firm Fineqia International, anticipate a positive approval but foresee a potential dip in bitcoin’s price before it resumes its upward trajectory. Greco believes that an ETF approval could usher in a new wave of investors, enhancing market liquidity. This optimism aligns with major central banks signaling potential interest rate cuts in 2024, contributing to the positive performance of cryptocurrencies.
This optimism marks a significant shift from the challenges faced by the crypto industry in the previous year, notably with the collapse of businesses such as FTX. As 2024 begins, experts express optimism about potential gains, especially given Bitcoin’s historical strong performance during U.S. election years. Markus Thielen, founder of digital asset research firm 10x Research, underscores the correlation between bitcoin halving cycles and U.S. election years, pointing to observed phenomena in 2012, 2016, and 2020, predicting similar gains in 2024.
In summary, the commencement of 2024 paints a promising picture for the cryptocurrency market, with Bitcoin and other digital assets experiencing notable rallies. The surge is attributed to the anticipated approval of a spot bitcoin ETF by the SEC and the potential for interest rate cuts by major central banks. These factors signal a potential turnaround for the crypto industry, setting the stage for a closely watched SEC decision and its potential implications on the market’s trajectory.
Source: Reuters
