Bitcoin soars past $40,000 on optimism for US trading approval
Cryptocurrency remains well below its record value of almost $69,000 in 2020
Bitcoin has broken above $40,000 for the first time since May 2022 as it rides a wave of momentum on broad enthusiasm about U.S. interest rate cuts and as traders bet on the imminent approval of U.S. stock market-traded bitcoin funds.
The world's biggest cryptocurrency hit as high as $41,748 on Monday, its highest since April 2022, seemingly casting off the funk that had settled over crypto markets following the collapse of FTX and other crypto-business failures last year.
It was last up 4% at $41,627. Its 50% rally since mid-October has "seemed to mark a decisive shift away from the bearishness of 2022 and early 2023," said Justin d'Anethan - head of business development for Asia-Pacific at Keyrock, a digital assets market making firm.
D'Anethen said evidence of institutional buying through November showed a new leg of interest and that although reversals ahead were not inconceivable, lows hit around $16,000 a year ago "probably marked the bottom".
Bitcoin is up by over 150% so far this year.
Bitcoin-investor Microstrategy last week disclosed it bought an additional $593 million in bitcoin during November.
Meanwhile, riskier investments and other interest-rate sensitive assets, such as gold, have also rallied hard over the last few weeks as markets wager that the U.S. Federal Reserve has finished hiking rates and will start cutting early in 2024.
Reports in October that the U.S. Securities and Exchange Commission won't appeal a court ruling that found the agency had been wrong to reject an exchange-traded fund application have also driven bets that an eventual approval is near.
A spot bitcoin ETF could allow previously wary investors access to crypto via the stock market, ushering a new wave of capital into the sector.
Investors have also welcomed the settlement of a years-long U.S. criminal probe into Binance, the world's largest crypto exchange and a key cog in the worldwide crypto market. The deal, which saw Binance founder Changpeng Zhao step down after pleading guilty to breaking U.S. anti-money laundering laws, allows the company to continue operating.
Ether, the coin linked to the Ethereum blockchain network, also rose to a 1-1/2 year high on Monday, hitting $2,264.
Both bitcoin and ether remain far below their record highs, hit in 2021, of $69,000 and $4,868 respectively.