Bitcoin surged to $40,000, marking its highest value since May 2022, as the leading digital asset extended its rebound in 2023. The increase is attributed to expectations of interest-rate reductions and growing demand from exchange-traded funds, according to a Bloomberg report.
In the early hours of Monday, the cryptocurrency gained approximately 1%, reaching $40,005 in Singapore. This brought its 2023 surge to 142%. Bitcoin had last touched the $40,000 mark before the collapse of the TerraUSD stablecoin, which contributed to a broader downturn in digital assets.
Investors are increasingly confident that the Federal Reserve has concluded its rate hikes as inflation cools, shifting attention to potential rate cuts in the coming year. This change in the economic landscape has triggered a rally across global markets.
According to Tony Sycamore, a market analyst at IG Australia Pty, Bitcoin’s optimism is driven by expectations of SEC approval for an ETF and anticipated Fed rate cuts in 2024. Technical chart patterns suggest that $42,330 is the next crucial level to monitor, he noted.
Despite facing challenges such as the 2022 crypto crash and a US crackdown resulting in legal actions against FTX’s Sam Bankman-Fried and fines for Binance and its founder Changpeng Zhao, Bitcoin has demonstrated resilience.
Analysts view regulatory efforts and the influx of ETF applications as signs of the industry maturing, potentially attracting a broader investor base. Additionally, the upcoming Bitcoin halving scheduled for next year, which reduces the reward tokens received by miners by half, is seen as a positive factor influencing sentiment. This quadrennial event is part of the process to cap Bitcoin’s supply at 21 million tokens and has historically coincided with record highs for the cryptocurrency.
Despite the current surge, Bitcoin and other major tokens like Ether and BNB remain below their peak levels reached during the cryptocurrency bull-run in the pandemic era. In November 2021, Bitcoin reached an all-time high of nearly $69,000.
