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On Monday in Asia, Bitcoin achieved a significant milestone by surpassing the $40,000 threshold for the first time this year. This surge was fueled by the widespread anticipation of the approval of a Bitcoin exchange-traded fund (ETF) and speculation regarding potential interest rate cuts by the U.S. Federal Reserve.
The world’s largest cryptocurrency experienced a remarkable surge of over 5%, reaching a 19-month high and trading at $41,667 as of 7:20 am ET, as indicated by Coin Metrics data. According to LSEG, this marks the first instance since May 2022 that Bitcoin has exceeded the $40,000 level. Notably, Bitcoin has witnessed a remarkable uptrend, boasting an increase of more than 145% since the beginning of the year.
This development follows a series of scandals that rattled the market, notably the collapse of the FTX crypto exchange in November of the preceding year. In the latest update, FTX founder Bankman-Fried has been found guilty of all seven criminal charges linked to the downfall of his cryptocurrency empire.
“With the revisitation of the $40,000 mark for the first time in almost 19 months, the next crucial thresholds appear to be at $48,000 and $52,000,” remarked Antoni Trenchev, co-founder of the digital asset company Nexo.
According to CNBC’s recent report, officials from the U.S. Securities and Exchange Commission (SEC) held meetings with representatives from Grayscale, BlackRock, and the Nasdaq. In a memo, the SEC disclosed a meeting with Grayscale concerning the potential conversion of the Grayscale Bitcoin Trust into an ETF. Notably, the SEC had previously blocked this conversion, but Grayscale successfully challenged and overturned that decision in court.
This bolstered market confidence in the potential approval of a Bitcoin ETF, contributing to the upward trajectory of the world’s largest cryptocurrency. Antoni Trenchev commented, “The speed at which Bitcoin approaches $50,000 may hinge on the approval of a spot-Bitcoin ETF. However, even with the much-anticipated nod from the SEC, there’s no assurance it will act as a catalyst to significantly boost the price.”
In a fireside chat on December 1, Federal Reserve Chairman Jerome Powell emphasized that it is premature to discuss interest rate cuts at this time. Powell stated that the central bank will maintain a “restrictive” policy stance until policymakers are confident that inflation is firmly heading back to the 2% target. According to a transcript, Powell noted, “Similar to most forecasters, my colleagues and I expect a deceleration in spending and output growth over the next year. This is anticipated as the impacts of the pandemic and the subsequent reopening wane, coupled with the constraining effects of monetary policy on overall demand.”
His remarks fueled expectations that the Federal Reserve is likely to pause its interest rate hikes for the time being, given that the series of rate increases since March 2022 has impacted economic activity. However, simultaneously, Powell indicated that it is “premature to confidently assert that we have implemented a sufficiently restrictive stance” and acknowledged the possibility of additional rate hikes in the future.
