Bitcoin at $40,000 level, first time since May 2022, still below all-time high during pandemic | Mint
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Business News/ Markets / Cryptocurrency/  Bitcoin at $40,000 level, first time since May 2022, still below all-time high during pandemic
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Bitcoin at $40,000 level, first time since May 2022, still below all-time high during pandemic

Bitcoin surpasses $40,000 for the first time since May 2022, fueled by expectations of interest-rate reductions and increased demand from exchange-traded funds.

Markets around the world have rallied as a result of the changed backdrop. REUTERS/Marco Bello (REUTERS)Premium
Markets around the world have rallied as a result of the changed backdrop. REUTERS/Marco Bello (REUTERS)

Despite expectations of interest-rate reductions and increased demand from exchange-traded funds, Bitcoin surpassed $40,000 for the first time since May 2022.

In the early hours of Monday morning, the token added about 1% to trade at $40,005 on Monday in Singapore, taking its 2023 jump to 142%. Before the TerraUSD stablecoin collapse, Bitcoin was last at $40,000, contributing to a rout in digital assets.

With inflation cooling, investors are increasingly convinced the Federal Reserve has finished raising rates, turning their attention to likely rate cuts next year. Markets around the world have rallied as a result of the changed backdrop.

In addition, the industry awaits BlackRock Inc.'s application to launch the first Bitcoin exchange-traded fund in the United States. Securities and Exchange Commission approval is expected to be granted to a batch of such funds by January, according to Bloomberg Intelligence.

“Bitcoin continues to be supported by optimism around SEC approval for an ETF and Fed rate cuts in 2024," Tony Sycamore, a market analyst at IG Australia Pty, wrote in a note. Technical chart patterns point to $42,330 as the next level to watch for, he added, as quoted by Bloomberg.

After the 2022 crypto crash, Bitcoin has weathered a US crackdown that put Sam Bankman-Fried behind bars for fraud at FTX and fined Binance and its founder Changpeng Zhao.

Many analysts believe that the drive to curb questionable practices and the flurry of ETF applications signal a maturing industry and potential for digital assets to attract a broader investor base.

There is still a possibility that Bitcoin could be derailed by a reset in rate bets or unexpected delays for the ETFs, but for now, the market outlook is positive.

Among the props for sentiment is the so-called Bitcoin halving that is due next year, which will reduce the amount of tokens Bitcoin miners receive as a reward in half.

As part of the process of capping Bitcoin supply at 21 million tokens, the quadrennial event takes place every four years. In each of the last three halvings, the coin hit records.

Bitcoin and smaller tokens like Ether and BNB remain well below the all-time highs reached during the crypto bull run during the pandemic era. In November 2021, the largest token reached almost $69,000.

(With Inputs from Bloomberg)

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Published: 04 Dec 2023, 07:38 AM IST
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