The catalyst in each market is different. While traditional markets like gold and stocks focus on the possibility of the Fed cutting interest rates in 2024, Bitcoin is focused on the possibility of the U.S. Securities and Exchange Commission (SEC) approving a Bitcoin ETF. Thanks to the excitement surrounding the eagerly anticipated physically settled Bitcoin ETF, the largest cryptocurrency has broken out of the range it had been trapped in for the past three weeks.
“The biggest motivation behind the price surge of Bitcoin could be the number of applications for physically settled Bitcoin ETFs expected to be approved by the SEC,” shared Yiannis Giokas, Senior Director at Moody’s Analytics, in an email. “The race is heating up, with large fund management firms starting to pay attention to Bitcoin.”
Bitcoin rose 6.1% to $42,144 before cooling down slightly. This was the highest level since April 2022, before stablecoin TerraUSD collapsed and triggered a $2 trillion cryptocurrency market sell-off. Bitcoin is on track for its best year since 2020.
Smaller cryptocurrencies such as Ethereum and Dogecoin have also been soaring. Bitcoin Cash surged 9% and an index tracking the top 100 cryptocurrencies added 4%. Companies involved in cryptocurrencies also went against the overall market trend, with Coinbase Global rising 5.5%, Bitcoin mining company Marathon Digital Holdings Inc. gaining 8.6%, and Bitcoin enthusiast company MicroStrategy jumping 6.7%.
The cryptocurrency industry is also awaiting the outcome of the registration of BlackRock’s physically settled Bitcoin ETF. Bloomberg Intelligence expects the SEC to approve Bitcoin ETFs for trading in January 2024.
“Bitcoin continues to lean on the optimistic sentiment around ETFs and the possibility of the Fed cutting interest rates in 2024,” wrote Tony Sycamore, Market Analyst at IG Australia, in a report. Technical patterns suggest that the $42,330 level is the next milestone to watch, he added.
Bitcoin has overcome a series of challenges in the cryptocurrency market to stage a recovery. Sam Bankman-Fried faces the possibility of a 100-year prison sentence for fraud-related activities on the FTX cryptocurrency exchange. Meanwhile, Binance founder Changpeng Zhao pleaded guilty to charges of failing to comply with anti-money laundering regulations.
Optimists believe that the cryptocurrency industry’s purge campaign and the influx of ETF applications could expand the investor base for the cryptocurrency market.
“It seems like 2023 is the year that prepares for a new bull run for Bitcoin. Investors’ sentiment towards 2024 and 2025 is very optimistic,” said Pascal Gauthier, CEO of Ledger.
From an optimistic standpoint, many cryptocurrency industry leaders believe that the tough crackdown on misconduct has helped make the cryptocurrency industry more robust.
“I think once the speculation dies off, the true builders in the cryptocurrency space will focus on the technology and the problems they’re solving in the world, rather than just having this giant digital casino for people to speculate on,” shared David Marcus, CEO of Lightspark. Marcus is currently developing technology to facilitate Bitcoin payments.
