Bitcoin soared to its highest level since April 2022, surpassing $42,000 in a renewed surge of momentum. The cryptocurrency’s rally was driven by expectations of a US interest rate cut and speculation that American regulators will soon approve exchange-traded spot bitcoin funds. This upward movement comes as the market recovers from the collapse of FTX and other crypto-business failures last year.
The rise in Bitcoin’s value also had a positive impact on cryptocurrency-related companies and exchange-traded funds in the United States. Coinbase saw a 7% jump in its shares, while Microstrategy recorded a 6.3% gain. Bitcoin miners such as Riot Platforms, Marathon Digital, and CleanSpark experienced increases between 7% and 13%. Furthermore, Microstrategy disclosed last week that it purchased an additional $593 million worth of bitcoin in November.
Investors and traders are buoyed by the prospect of the US securities regulator approving a spot bitcoin exchange-traded fund (ETF). This development would open the bitcoin market to millions more investors. Additionally, an anticipated easing of inflation and subsequent central bank rate hikes are making riskier assets like bitcoin more attractive. Institutional engagement with bitcoin is also steadily increasing.
Bitcoin’s remarkable ascent has been further supported by reports in October that the US Securities and Exchange Commission (SEC) would not appeal a court ruling against its rejection of a spot bitcoin ETF application. This news has heightened expectations that the SEC may grant approval in the near future. Market participants eagerly anticipate the entrance of a spot bitcoin ETF, as it would provide regulated access to crypto through the traditional stock market. Initial demand for such a product is projected to be as high as $3 billion, with even greater capital inflows anticipated beyond the first few days of trading.
Investors have also embraced the resolution of a long-running US criminal investigation into Binance, the world’s largest crypto exchange. The settlement allowed Binance to continue operating after its founder, Changpeng Zhao, stepped down and pleaded guilty to violating US anti-money laundering laws.
Ether, the cryptocurrency connected to the Ethereum blockchain network, also experienced gains, rising by over 6% to reach $2,274.88 on Monday.
Although bitcoin and ether remain significantly below their record highs from 2021, namely $69,000 and $4,868, respectively, the recent surge in their values signals renewed investor interest and optimism.
In summary, bitcoin’s climb to a 20-month high reflects a confluence of positive factors, including expectations of a US interest rate cut and the potential approval of spot bitcoin ETFs by American regulators. The market resurgence follows setbacks from previous crypto-business failures. Experts believe that a spot bitcoin ETF could attract billions of dollars from traditional finance investors and significantly broaden market participation. Concurrently, the resolution of the Binance investigation has provided further comfort to investors. Additionally, the rise in ether’s value adds to the overall positive sentiment in the cryptocurrency market.
