Bitcoin surged beyond the $45,000 mark on Tuesday, marking its highest level since April 2022, as the leading cryptocurrency began the new year with a strong performance. This upward momentum is fueled by optimism surrounding the potential approval of exchange-traded spot bitcoin funds.
Reaching a 21-month peak at $45,922, Bitcoin experienced a remarkable 156% gain in the previous year, marking its strongest yearly performance since 2020. As of the latest update, Bitcoin is up 3.1% at $45,509, though it still lags behind its all-time high of $69,000 achieved in November 2021.
Ether, the second-largest cryptocurrency, also witnessed a 1.2% increase, reaching $2,386.50 on Tuesday. Ether had an impressive performance in 2023, surging by 91%.
Cryptocurrency-related stocks, which often follow the price movements of Bitcoin, saw significant gains. Companies like Riot Platforms, Marathon Digital, and CleanSpark experienced increases ranging from 7% to 10% after notable declines in the final trading day of 2023. Software firm and Bitcoin investor MicroStrategy added 13.4%, while the ProShares Bitcoin Strategy ETF, which tracks Bitcoin futures, saw a gain of 7.8%.
Investor attention is currently focused on the possibility of the U.S. securities regulator approving a spot Bitcoin ETF. Such approval could open the market to a broader range of investors and attract substantial investments. Despite previous rejections of spot Bitcoin ETF applications, there are increasing signs that regulators may approve some of the 13 proposed spot Bitcoin ETFs, with expectations that a decision will likely be made in early January.
Matteo Greco, an analyst at digital asset firm Fineqia International, expressed optimism about a positive approval and suggested that a retracement to lower price levels may occur after approval before a subsequent upward movement. The approval of a spot Bitcoin ETF is anticipated to bring in new investors and enhance market liquidity.
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 hung over crypto markets following the collapse of FTX and other crypto-business failures in 2022.
Looking ahead, some analysts predict further gains in crypto markets in 2024, citing Bitcoin’s historical performance during U.S. election years. Markus Thielen, founder of digital asset research firm 10x Research, noted that Bitcoin tends to perform well during U.S. election years, coinciding with Bitcoin halving cycles in 2012, 2016, and 2020.
In summary, Bitcoin’s surge above $45,000 at the beginning of the year reflects renewed optimism in the cryptocurrency market. The potential approval of a spot Bitcoin ETF and favorable macroeconomic factors contribute to the positive momentum, with investors closely watching regulatory developments for cues on the market’s future direction.
