(Bloomberg) — Bitcoin rose $40,000 for the first time since May 2022, as the largest digital asset rebounded on expectations of interest rate cuts and increased demand for exchange-traded funds.
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The token added around 1% to trade at $40,005 as of 7:22 a.m. Monday in Singapore, taking its 2023 jump to 142%. Bitcoin was last at $40,000 before the collapse of stablecoin TerraUSD contributed to a rout in digital assets and a string of collapses in the crypto sector.
Investors are increasingly convinced that the Federal Reserve is done with rate hikes as inflation cools, and are now focusing on the likely size of cuts next year. The change in context has fueled a recovery in global markets.
The digital assets industry is also awaiting the outcome of requests from companies like BlackRock Inc. to roll out the first spot Bitcoin ETFs in the United States. Bloomberg Intelligence expects a batch of these funds to gain approval from the Securities & Exchange Commission by January.
âBitcoin continues to be supported by optimism around SEC approval of an ETF and Fed rate cuts in 2024,â wrote Tony Sycamore, market analyst at IG Australia Pty, in a note. Technical chart trends point to $42,330 as the next level to watch, he added.
Bitcoin’s rebound from the 2022 crypto crash has weathered a US crackdown that put Sam Bankman-Fried behind bars for defrauding FTX and levied heavy fines on Binance and its founder Changpeng Zhao.
Optimists say the push to combat questionable practices and the wave of ETF applications signal a maturing sector and the potential for a broader investor base for digital assets.
A reset in rate bets or unexpected ETF grunts could still derail Bitcoin, but for now the market mood is optimistic.
One sentiment item is the so-called Bitcoin halving planned for next year, which will halve the number of tokens Bitcoin miners receive as rewards for their work.
The quadrennial event is part of the process to cap Bitcoin’s supply at 21 million tokens. The coin reached record highs after each of the last three halves.
Bitcoin and smaller tokens such as Ether and BNB are still well below the all-time highs reached during the pandemic-era crypto bull run. The largest token peaked at nearly $69,000 in November 2021.
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