NEW YORK: Bitcoin reached a significant milestone on Monday, surpassing the $40,000 mark for the first time since May of the previous year.
The surge in the world’s largest cryptocurrency is fuelled by growing optimism that the United States will soon allow broader trading and investment in Bitcoin.
In 2023, Bitcoin has experienced a remarkable ascent, with a nearly 150 percent increase in value. Market expectations are rising as US regulators are anticipated to permit the creation of exchange-traded funds (ETFs) tied to the cryptocurrency. ETFs would enable the public to invest in Bitcoin without directly acquiring the digital asset.
Lucy Guzmararian, founder of Token Bay Capital, expressed the prevailing sentiment, stating, “The idea that institutional money in US capital markets is going to have a legitimate, compliant avenue… the expectations are extremely high that that’s really going to take bitcoin to new levels,” in an interview with Bloomberg.
As of 0400 GMT on Monday, Bitcoin was trading above $40,700. Although still below its record value of almost $69,000 in 2020, the current rally marks a recovery for Bitcoin following high-profile scandals and collapses that impacted the cryptocurrency industry.
Market observers are closely watching developments in the US regulatory landscape, including the reconsideration of a bitcoin ETF application from asset manager Grayscale by the US Securities and Exchange Commission. Other groups, such as BlackRock and ArkInvest, have also submitted ETF requests, with the first decision expected by January 10.
Bitcoin’s recent surge is further supported by the belief that the US Federal Reserve has concluded its hiking program and may consider interest rate cuts in the coming year. Additionally, the cryptocurrency’s value is influenced by the anticipation of a supply crunch in 2024 due to the upcoming “halving” event, where the reward for mining new bitcoins is halved every four years. The next “halving” is scheduled for May 2024.
