Singapore (Reuters) – Bitcoin has surged above $45,000 on Tuesday, reaching its highest level since April 2022. This comes as the world’s largest cryptocurrency kicks off the New Year with a strong start, fueled by optimism surrounding the potential approval of exchange-traded spot bitcoin funds.
Last year, bitcoin gained 156%, marking its strongest annual performance since 2020. It has now reached a 21-month peak of $45,532, although it is still far from its record high of $69,000 in November 2021. Meanwhile, Ether, the coin linked to the ethereum blockchain network, has also seen a 2.6% increase to $2,414, after surging 91% in 2023.
In the U.S. premarket trading, crypto stocks, which closely track bitcoin prices, experienced a surge. Riot Platforms, Marathon Digital, and CleanSpark saw gains between 11.3% and 14.8%, following a sharp decline in the final days of 2022. U.S. crypto exchange Coinbase and software firm and bitcoin investor MicroStrategy also saw increases of 6.3% and 9.4%, respectively.
Investors are closely watching for the potential approval of a spot bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). This would open the market to millions of new investors and potentially draw in billions of dollars in investments. While the SEC has previously rejected multiple applications for spot bitcoin ETFs, there are signs that they may be more willing to approve them now.
In recent months, there has been a growing expectation that the SEC will make a decision on the 13 proposed spot bitcoin ETFs in early January. The reaction to a potential rejection would likely result in a significant drop in prices, according to Chris Weston, head of research at Pepperstone. However, if the ETFs are approved, it remains to be seen whether the market will see a “buy-the-rumour, sell-on-fact” scenario or see an upward trend.
The prospect of major central banks cutting interest rates this year has also contributed to the positive sentiment in the crypto market. This has helped to shake off the negative sentiment that followed the collapse of FTX and other crypto businesses in 2022.
Looking ahead, some experts believe that crypto markets could continue to see gains in 2024, as bitcoin tends to perform well during U.S. election years. This coincides with the Bitcoin halving cycles in 2012, 2016, and 2020, according to Markus Thielen, founder of digital asset research firm 10x Research.
Reporting by Ankur Banerjee in Singapore and Summer Zhen in Hong Kong, with additional reporting by Medha Singh in Bengaluru; Editing by Jacqueline Wong, Shri Navaratnam, and Krishna Chandra Eluri.
