The price of the cryptocurrency Bitcoin exceeded $40,000, as the largest digital assets continued their recovery this year amid expectations of a reduction in US interest rates and increased demand from exchange-traded funds.
The cryptocurrency rose by about 2.9% to $40,867 at 10:33 a.m. Monday, Singapore time, raising its jumps in 2023 to 146%.
Bitcoin was last at $40,000 in April 2022, before the collapse of the stable currency TerraUSD, which contributed to the digital assets sector losing about two trillion dollars.
Investors appear increasingly convinced that the Fed is done raising interest rates as inflation eases, and the focus is now turning to the potential extent of a rate cut next year. The change in expectations led to a collective recovery across global markets.
The digital assets industry is also awaiting the results of applications from companies such as BlackRock to launch the first spot Bitcoin ETFs in the United States. Bloomberg Intelligence expects a group of these funds to receive SEC approval by January.
Bitcoin price may breach $42,000
Bitcoin remains supported by optimism over SEC approval of Bitcoin ETFs and the Fed cutting interest rates in 2024, Tony Sycamore, a market analyst at IG Australia, wrote in a note. He added that the coin's technical chart patterns indicate To a price of $42,330 as the next level to look forward to.
Bitcoin's recovery from last year's cryptocurrency collapse has seen it withstand the US crackdown that put Sam Bankman Fried behind bars on charges of fraud at FTX. Major cryptocurrency exchange Binance and its founder Changpeng Zhao also faced criminal charges and hefty fines.
For optimists, the push to curb questionable practices and the wave of ETF orders indicate the maturity of the industry, and the potential for adoption of cryptocurrencies among a greater number of investors.
Su Yin Chia, co-founder of the Asian Cryptocurrency Alliance, said the recent enforcement measures have boosted confidence among investors. Adding that Bitcoin is enjoying new momentum, similar to traditional finance, with declining expectations of the Federal Reserve raising interest rates.
Bitcoin faces constant risks
Changing US interest rate bets or facing unexpected obstacles for ETFs could lead to Bitcoin stumbling, while some technical indicators indicate that the rise of the digital asset has exceeded its expected period.
For example, Bitcoin's weekly Relative Strength Index (which measures momentum in the cryptocurrency), has closed above 75 points over the past two weeks. Readings above 70 points are an indication of an overbought situation. It is worth noting here that over the past decade, Bitcoin has risen by 15% on average in the month following the weekly Relative Strength Index exceeding 75 points, according to data compiled by Bloomberg.
In the short term, the positioning of long positions suggests that a further rise in the price of Bitcoin may be difficult, the research team of cryptocurrency fund provider Grayscale Investments wrote in a note on December 1. However, the team expects the favorable conditions for digital assets to continue thanks to the financial and economic backdrop.
From the beginning of 2023 until now, Bitcoin's jump has exceeded the rise of other assets such as global stocks and gold. In the derivatives market, open interest recently rose to significant levels on the Chicago Mercantile Exchange for Bitcoin futures, and the same was repeated on the Deribit platform for options on the most popular cryptocurrencies.
Bitcoin miner reward halving
The expected halving of Bitcoin miners' rewards over the next year also gave an additional boost to investor sentiment around the cryptocurrency. This process halves the amount of tokens that Bitcoin miners receive as a reward for their work. The event, which takes place every four years, is part of the process of setting the maximum Bitcoin supply at 21 million tokens. The cryptocurrency reached record prices after the last three halvings.
However, Bitcoin and smaller cryptocurrencies such as Ethereum and Binance Coin are still well below the all-time highs achieved during the pandemic-era crypto bull. Bitcoin's price peaked at approximately $69,000 in November 2021.
Distressed Bitcoin miners are wary of a major halving event
Sissy Lou McCalman, founder of Venn Link Partners, which specializes in blockchain consulting, said: We expect the price of Bitcoin to reach $50,000 before any major correction occurs, pointing to the halving process and future expectations of US monetary policy as among the reasons that will support this. Boarding.
The rise in digital asset prices at the beginning of the week extended to cryptocurrency-related stocks in Asia. Japan's Monex Group and South Korea's Woori Technology Investment were among the beneficiaries of the recovery.
In the United States, shares of digital asset exchange Coinbase Global rose. And the software company MicroStrategy, the largest public joint stock company investing in Bitcoin, has increased by more than 270% since the beginning of the year until now. Last month, Micro Strategy purchased an additional $593 million worth of Bitcoin, bringing its proceeds to nearly $6.5 billion.
