Bitcoin surged past $45,000 on Tuesday, marking its first ascent to such levels since April 2022. The world’s largest cryptocurrency began the New Year on a high note, driven by optimism surrounding the potential approval of exchange-traded spot bitcoin funds.
Reaching a 21-month peak at $45,532, Bitcoin exhibited a remarkable 156% gain in the previous year, marking its most robust annual performance since 2020. Although currently at $45,318, up 2.5%, it still lags behind its record high of $69,000 in November 2021. In parallel, Ether, the cryptocurrency associated with the Ethereum blockchain network, saw a 1.45% increase, reaching $2,386 on Tuesday, with a notable 91% surge in 2023.
The focal point for investors remains the anticipation of U.S. regulatory approval for a spot bitcoin ETF, a development that could significantly broaden access to the bitcoin market for millions of investors and attract substantial investments. The US Securities and Exchange Commission (SEC) has consistently denied various requests to introduce spot bitcoin exchange-traded funds (ETFs) in recent years, citing concerns about the susceptibility of the cryptocurrency market to manipulation. Nevertheless, in recent months, there have been growing indications that regulators may approve some of the 13 proposed spot bitcoin ETFs, with expectations for a decision in early January. Chris Weston, the head of research at Pepperstone, emphasized that if the decision is a rejection, the response would be straightforward and likely result in an immediate decline.
On the other hand, if the green light is given, the key question is whether it will lead to a typical “buy the rumor, sell-on-fact” scenario or potentially fuel further upward momentum. Increasing speculation that major central banks will lower interest rates in the current year has provided support to cryptocurrencies, alleviating the pessimism that had gripped the crypto markets after the downfall of FTX and other crypto-related businesses in 2022. Jupiter Zheng, a partner of liquid funds at HashKey Capital, expressed optimism about significant growth in the crypto market this year. He attributed this positive outlook to factors such as the influx of investment funds from spot ETFs, the Bitcoin halving, and a more accommodative monetary policy both in the United States and globally.
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