Bitcoin broke the $45,000 barrier for the first time since April 2022
Bitcoin started the New Year with a spectacular rally, breaking through the $45,000 barrier today for the first time since April 2022. The world's largest cryptocurrency received this boost due to optimism about the possible approval of exchange-traded funds for spot-bitcoin.
Bitcoin hit a 21-month high of $45,532, showing a significant 156% gain over the past year – the strongest jump since 2020. It is currently trading at $45,727, up 3.5%, although it is still short of its all-time high of $69,000, reached in November 2021.
Ether, the digital token associated with Ethereum blockchain net, also rose, gaining 2.6% to $2,414 on Tuesday. Ethereum's performance over the past year has been impressive, with a significant 91% growth in 2023.
Confidence in Bitcoin is also visible on the world's stock markets
In the American market before trading there was a jump in shares related to cryptocurrencies, following a slight rise in bitcoin prices. Companies such as Riot Platforms, Marathon Digital and CleanSpark posted gains of 11.3% to 14.8%. Similarly, leading players such as US crypto exchange Coinbase saw a 6.3% gain, while software company and bitcoin investor MicroStrategy added 9.4%.
Investor attention is now focused on the possible approval of a spot-bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission. The approval of such a fund could open the market to millions of new investors and attract billions of dollars of investment, writes Reuters. The SEC has previously rejected several applications for these ETFs, citing concerns about the market's vulnerability to manipulation.
ReutersHowever, recent signals suggest the possible approval of at least some of the 13 proposed spot-bitcoin ETFs, with a decision expected to be made in early January.
According to Chris Weston, head of research at Pepperstone, a possible rejection would have a clear and immediately visible impact on the market, triggering a sharp decline.
“On the other hand, if we do see approval, the obvious question is whether it will trigger a sell-off after anticipation or spur another rally“, Weston wrote.
Cryptocurrencies also benefited from expectations that major central banks will cut interest rates this year, which helped boost sentiment in crypto markets following the FTX collapse and other crypto setbacks in 2022.
Crypto markets could extend their gains in 2024, as Bitcoin tends to perform well during US election years, which coincides with bitcoin's halving cycles in 2012, 2016 and 2020, said Markus Thielen, founder of the research firm digital asset firm 10x Research.