Bitcoin's price broke the $44,000 barrier after the cryptocurrency recorded its longest streak of gains since last May, sparking speculation about whether this rise reflects investors' increasing conviction that the Federal Reserve is preparing to ease its monetary policy.
The cryptocurrency - which is considered the largest digital asset in the crypto sector - achieved a series of gains over the 6 days until Tuesday, rising by about 16%, and consolidated its gains in early Asian trading on Wednesday. Its total rise since the beginning of 2023 is about 165%, compared to the low level it reached in the midst of the cryptocurrency crisis last year.
Much of this bullishness is due to the US potentially allowing the launch of the first exchange-traded fund to invest directly in Bitcoin, paving the way for a broader investor base to participate. Among the companies that have applied for a license to launch a cryptocurrency fund are BlackRock and Fidelity Investments. Some analysts expect that these funds will be allowed to be launched by next January.
But the support generated by expectations of the launch of Bitcoin ETFs has been evident since last June, when asset management companies began seeking the green light to launch ETFs. This raises some speculation about whether the new cryptocurrency rally is now drawing its strength from increased bets on a cut in US interest rates over the next year.
Bitcoin price and US interest expectations
Tony Sycamore, a market analyst at IG Australia, said that investors are certainly considering the potential for launching exchange-traded funds that invest directly in Bitcoin, but the huge volatility and huge jump in the price of Bitcoin this time reflects the cryptocurrency’s response in a way that... Greater forecasts of the Fed's compass shift and monetary policy. It is affected by this transformation more than any other asset class.
Bitcoin's current rise also overshadows fears that the rise will extend significantly beyond its expected limit. Smaller cryptocurrencies such as Ethereum, Avalanche, and Dogecoin, which are favored by meme investors, also rose in price.
Bitcoin bonus in Korea
Bitcoin's rise is particularly notable in some countries, as the cryptocurrency was traded on the Bithumb and Upbit exchanges in South Korea at about 4% higher than the prevailing global price on Wednesday, in a return to the so-called kimchi premium that dominated the scene during The rise of digital assets in the pandemic era.
In Abu Dhabi, the shares of Phoenix Group, a retailer of cryptocurrency mining devices, jumped by 35% yesterday, Tuesday, in its first trading after the IPO, thus becoming the first company listed in the cryptocurrency sector in the Middle East.
Turning to El Salvador, outgoing President Nayib Boguila said in a post on the X website this week that Bitcoin investments in the country are now generating significant profits. Boguila is running for re-election after stepping down as president last week.
The cryptocurrency is also receiving additional support from the upcoming Bitcoin halving process next year, which will halve the cryptocurrency rewards received by Bitcoin miners. This process (which is repeated once every four years) is part of restricting the supply of Bitcoin to 21 million unique digital tokens. The cryptocurrency recorded record levels after the last 3 halvings.
Factors supporting Bitcoin's rise
“Micro and macroeconomic factors are currently aligned in Bitcoin’s favor,” said Zach Bandel, managing director of research at Grayscale Investments, which specializes in providing cryptocurrency funds.
The price of Bitcoin witnessed a slight change and fell to $43,851 at 10:16 am Singapore time, and is still about $25,000 lower than the record level it reached in 2021, which was about $69,000.
