For the first time since April 2022, Bitcoin surged beyond $45,000 on Tuesday. The largest cryptocurrency in the world had a spectacular start to the year thanks to hopes for the approval of exchange-traded spot bitcoin funds.
With its highest year performance since 2020, Bitcoin gained 156% last year and reached a 21-month high of $45,922. It is still far from the record high of $69,000 it reached in November 2021, even though it was up 3.1% at $45,509 as of late.
After rising 91% in 2023, ether, the second-most popular cryptocurrency, was 1.2% higher at $2,386.50 on Tuesday.
Following steep declines in the previous trading day, cryptocurrency stocks—which track changes in the price of bitcoin—rose sharply. Riot Platforms (RIOT.O), Marathon Digital (MARA.O), and CleanSpark (CLSK.O) all saw gains of between 7% and 10%.
ProShares Bitcoin Strategy ETF (BITO.P), which follows bitcoin futures, climbed 7.8%, while software company and bitcoin investor MicroStrategy (MSTR.O) added 13.4%.
The main concern among investors has been whether the U.S. securities regulator will soon authorize a spot bitcoin ETF, which would attract billions of dollars in investments and open up the market to millions more people.
In recent years, the U.S. Securities and Exchange Commission has denied many requests to introduce spot bitcoin exchange-traded funds (ETFs), citing concerns about market manipulation.
Nonetheless, there have been more indications in recent months that authorities are ready to approve at least some of the 13 proposed spot bitcoin ETFs, with anticipations the decision will likely come in early January.
We anticipate a favorable approval, and I wouldn’t be shocked if, following the clearance, there is a pullback to earlier price levels before an increase occurs once more,” stated Matteo Greco, an analyst with Fineqia International (FNQ.CD), a digital asset firm.
“Open the door to cohorts of investors that are out of this market at the moment and will definitely improve the liquidity of the market,” Greco continued in response to the approval of a spot bitcoin ETF.
Growing expectations that major central banks will lower interest rates this year have also helped cryptocurrencies recover, dispelling some of the pessimism that had enveloped the market after FTX’s collapse and other 2022 crypto-business flops.
According to Markus Thielen, founder of digital asset research firm 10x Research, bitcoin tends to do well during U.S. election years, coinciding with cycles of the cryptocurrency’s halving in 2012, 2016, and 2020, therefore crypto markets could continue their gains in 2024.
