Bitcoin soared beyond $45,000 on Tuesday, marking its highest level since April 2022, as the world’s largest cryptocurrency kicked off the New Year on a strong note. The surge is fueled by optimism surrounding the potential approval of exchange-traded spot bitcoin funds (ETFs).
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Reaching a 21-month peak at $45,532, Bitcoin demonstrated a remarkable 156 per cent gain in the previous year, its most robust yearly performance since 2020. Presently, it stands at $45,318, reflecting a 2.5 per cent increase, though still notably below the all-time high of $69,000 reached in November 2021.
Ether, the cryptocurrency associated with the Ethereum blockchain network, also experienced positive momentum, rising by 1.45 per cent to $2,386 on Tuesday. Ether had an impressive 91 per cent surge in 2023.
Investor attention is primarily focused on the potential approval of a spot bitcoin ETF by the US Securities and Exchange Commission (SEC). The approval of such an ETF is anticipated to open up the bitcoin market to a broader investor base and attract substantial investments.
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While the SEC has previously rejected several applications for spot bitcoin ETFs, there are growing indications that some of the 13 proposed ETFs might receive approval, with expectations for a decision in early January.
Chris Weston, Head of Research at Pepperstone, highlighted the clear-cut reaction if the ETF is rejected, anticipating an immediate decline. On the other hand, if approved, the market’s response is uncertain, with questions about whether it will lead to a “buy the rumour, sell-on-fact scenario” or propel another upward movement.
Cryptocurrencies have also benefited from rising expectations that major central banks will reduce interest rates in the coming year. This positive sentiment has helped dispel the gloom that lingered over crypto markets following the collapse of FTX and other crypto-business failures in 2022.
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Jupiter Zheng, Partner of Liquid Funds at HashKey Capital, foresees notable growth in the crypto market in the upcoming year, attributing it to factors such as increased investment from spot ETFs, Bitcoin halving, and a more accommodative monetary policy globally, including in the United States.
