Bitcoin surged past $40,000 for the first time this year, marking a 19-month high driven by prospects of a bitcoin exchange-traded fund (ETF) approval and speculation on U.S. interest rate
cuts.
The world's leading cryptocurrency climbed over 4% in Asia, reaching as high as $41,520 by 12:30 a.m. ET, as per Coin Metrics data. This upswing signals a resurgence after breaching the $40,000 mark last seen in May 2022, marking a 145% increase since the year began.
This surge follows market tumult triggered by incidents like the collapse of the FTX crypto exchange in November last year. Last month, FTX founder Bankman-Fried faced conviction on seven charges related to his crypto empire's collapse.
"Given the revisiting of the $40,000 milestone after almost 19 months, $48,000 and $52,000 appear to be the next crucial thresholds," noted Antoni Trenchev, Nexo's co-founder.
Reports revealed that U.S. Securities and Exchange Commission officials met with Grayscale, BlackRock, and Nasdaq representatives. The SEC discussed with Grayscale the potential conversion of the Grayscale Bitcoin Trust into an ETF, following Grayscale's successful legal challenge to the SEC's previous block.
Optimism soared in the market as talks of a bitcoin ETF approval gained traction, propelling the cryptocurrency's value.
"The pace at which Bitcoin approaches $50,000 might hinge on the approval of a spot-Bitcoin ETF. Even then, there's no certainty that the SEC's anticipated nod will significantly boost prices," Trenchev cautioned.
Federal Reserve Chairman Jerome Powell, in a fireside chat on December 1, indicated that it's premature to contemplate interest rate cuts, affirming the Fed's commitment to a "restrictive" policy until solid signs of inflation returning to the 2% target emerge.
While Powell suggested a potential slowdown in spending and output over the coming year due to pandemic effects and a tight monetary policy, his remarks indicated the likelihood of the Fed holding off on further rate hikes after a series of increases since March 2022. However, he left room for the possibility of additional hikes in the future. Photo by Isokivi, Wikimedia commons.