4th December 2023 – (New York) Bitcoin, the largest digital currency by market capitalisation, has surged past the $40,000 benchmark for the first time since May 2022, reflecting a robust recovery in the cryptocurrency market. The resurgence is fueled by a combination of factors including interest-rate reductions, increased demand from exchange-traded funds, and the anticipated approval of U.S. spot Bitcoin Exchange-Traded Funds (ETFs).
The digital token experienced a modest increase of about 1% on Monday, trading at US$40,005 in Singapore. This rebound marks an impressive 142% surge in 2023, a significant recovery from the previous year’s slump, which saw the token value plummet following the collapse of the TerraUSD stablecoin.
The tumultuous crypto market has been witnessing a shift in the tide. Investors are increasingly optimistic that the US Federal Reserve will halt rate hikes, with cooling inflation driving the focus towards potential rate cuts in 2024. This change in monetary policy has sparked a global market rally, with Bitcoin being at the forefront.
The crypto industry is also on tenterhooks as it awaits the outcome of applications from financial giants, such as BlackRock Inc., to launch the inaugural US spot Bitcoin ETFs. Bloomberg Intelligence anticipates a slew of these funds to receive approval from the Securities & Exchange Commission by January 2024.
“Bitcoin’s recent surge is upheld by a positive outlook surrounding the SEC’s approval of an ETF and impending Fed rate cuts,” commented Tony Sycamore, a market analyst at IG Australia Pty. With technical chart patterns indicating US$42,330 as the next milestone, the digital asset market is set for an exciting start to 2024.
Despite Bitcoin’s impressive recovery, it is still a considerable distance from its all-time high of almost US$69,000 achieved in November 2021. Other cryptocurrencies, like Ether and BNB, are also trailing behind their peak values, reflecting the continuing volatility of the digital asset market.
However, Bitcoin’s resilience in the face of adversity, such as the US crackdown on fraudulent practices in the crypto sector, has shone a light on the maturing industry and the potential for an expanding investor base.
The upcoming Bitcoin halving in 2024, which will slash the reward for Bitcoin miners by half, is another catalyst buoying the market sentiment. This quadrennial event is part of the process of capping Bitcoin supply at 21 million tokens. Historically, Bitcoin has hit records following each of the last three halvings.