In a resounding start to the New Year, Bitcoin surged above $45,000 on Tuesday, marking its highest point since April 2022. The world's largest cryptocurrency has gained significant momentum, propelled by optimistic sentiments surrounding the potential approval of exchange-traded spot bitcoin funds.
Bitcoin reached a 21-month peak at $45,532, showcasing a remarkable 156% surge over the past year—the most robust annual performance since 2020. Presently, it stands at $45,727, reflecting a 3.5% increase. However, it still trails behind its record high of $69,000 in November 2021.
On Tuesday, Ether, the cryptocurrency linked to the Ethereum blockchain network, experienced a 2.6% uptick, reaching $2,414. Ether had an impressive 91% surge in 2023.
U.S. premarket trading witnessed a notable boost in crypto stocks, closely aligned with bitcoin prices. Riot Platforms, Marathon Digital, and CleanSpark gained between 11.3% and 14.8%, rebounding after sharp declines in the final days of 2022. U.S. crypto exchange Coinbase saw a 6.3% rise, while software firm and bitcoin investor MicroStrategy added 9.4%.
Investor attention is currently focused on the potential approval of a spot bitcoin ETF by the U.S. securities regulator. The approval could open the market to a broader investor base and attract substantial investments. Despite the U.S. Securities and Exchange Commission's historical rejection of spot bitcoin ETF applications, recent signs suggest a shift in regulatory stance, with expectations for a decision in early January.
Chris Weston, Head of Research at Pepperstone, highlighted the clear-cut market response to a possible rejection, anticipating an immediate downturn. He also pondered whether a green light would result in a buy-the-rumor, sell-on-fact scenario or propel another upward market trend.
Additionally, rising bets on major central banks cutting interest rates in the coming year have contributed to the positive momentum in cryptocurrencies. This shift has helped dispel the gloom that settled over following the collapses of FTX and other crypto-businesses in 2022.
Looking ahead, there are optimistic forecasts for crypto markets in 2024, particularly for Bitcoin. Markus Thielen, Founder of digital asset research firm 10x Research, pointed out that Bitcoin tends to perform well during U.S. election years, aligning with Bitcoin halving cycles in 2012, 2016, and 2020.
