Bitcoin exceeded $45,000 on Tuesday for the first time since April 2022, as the world’s largest cryptocurrency started the new year strongly, driven by optimism about the potential approval of Bitcoin exchange-traded funds (ETFs).
Bitcoin reached a 21-month high at $45,532 after a 156% surge in the past year, marking its strongest annual performance since 2020. In the latest trading, it rose by 3.5% to $45,727 but remains far from its all-time high of $69,000 recorded in November 2021.
Ethereum, the cryptocurrency linked to the Ethereum blockchain network, also increased by 2.6% to $2,414 on Tuesday, following a 91% gain in 2023.
Shares of cryptocurrency platforms, closely tracking Bitcoin’s prices, rose in pre-market trading in the United States by 11.3% to 14.8% after sharp declines in the final trading days of 2022. The stock of the U.S. cryptocurrency exchange “Coinbase” increased by 6.3%, and the software company and Bitcoin investor “MicroStrategy” rose by 9.4%.
Investor focus has been directly on whether the U.S. Securities and Exchange Commission (SEC) will soon approve Bitcoin exchange-traded funds (ETFs). Such approval could open the market to millions of other investors and attract billions in investments.
The SEC had rejected several requests for launching Bitcoin ETFs in recent years, citing concerns about potential market manipulation.
However, in recent months, there have been increasing signs that regulators may be willing to approve at least some proposed Bitcoin spot ETFs, totaling 13 funds, with expectations that a decision is likely to come in early January.
Chris Weston, Head of Research at “Pepperstone,” stated that the reaction to the potential rejection would be clear, likely leading to an immediate decline. He added in a memo, “However, if we get the green light, the clear question is whether we get a ‘buy the rumor, sell the fact’ scenario or whether it sparks another rally.”
Growing bets that major central banks will cut interest rates this year have acted as a catalyst for cryptocurrencies, helping shake off the gloom that had settled on cryptocurrency markets following the collapse of “FTX” and other cryptocurrency business failures in 2022.
On the other hand, global stock markets had mixed performances on the first sessions of the year. U.S. stock futures fell, with “Apple” shares declining due to a rating downgrade, and investors pondering whether they could maintain the substantial market gains achieved last year.
However, the three major U.S. stock indices posted monthly, quarterly, and yearly gains on Friday as traders anticipated greater opportunities for interest rate cuts by the Federal Reserve this year amid slowing inflation.
Key economic data remains at the forefront of investor interests, including the monthly Purchasing Managers’ Index for the Eurozone to be released later and the Producer Price Index on Friday. On the other side of the Atlantic, non-farm payrolls data for December will also be analyzed for policy insights. The energy sector saw a 1.4% rise, supported by higher oil prices.
