In Short
- Bitcoin price zooms past the $40,000 level for the first time in 18 months.
- The latest surge is related to the possibility that BTC spot ETFs will soon be approved by the Securities and Exchange Commission in the US.
- Market analysts are predicting BTC to hit $125,000 by the end of 2024 as the Federal Reserve begins interest rate reversals.
On Sunday, December 3, the price of Bitcoin (BTC) hit $40,000 for the first time since April 2022. Meanwhile, Ethereum (ETH) rose past $2,200 amid a broader rally in the crypto market.
According to data from CoinGecko, Bitcoin surged from under $39,500 to reach the $40,000 level, which it has been toying with over the past week. This also marks a new year-to-date high for the apex cryptocurrency, having been up by over 146% since January 1, 2023.
However, Bitcoin is still down 42% from its all-time high of $69,000 in November 2021.
After having dropped below the $40,000 level in May 2022, the world’s most valuable cryptocurrency has seen its prices move upward since June 2023, largely due to investment giants such as BlackRock, Fidelity, and Franklin Templeton, preparing to list BTC-focused exchange-traded funds (ETFs) for the US spot market. The industry is optimistic that the Securities and Exchange Commission (SEC) will soon approve the listing of the product.
Analysts Say 2023 Is The Start Of The Three-Year Bull Cycle, Expects BTC To Hit $125K Before 2025
In a note to investors, Matrixport research lead Markus Thielen predicted that Bitcoin could surge past $60,000 by April 2024 and even cross $125,000 by the end of next year. Based on his analysis, the last three crypto bear markets were followed by a three-year bull cycle, indicating that 2023 is the first year of the current bull run.
Thielen further explained that historically, the years when Bitcoin mining rewards were halved “were generally bullish”. The cryptocurrency is expected to go through a halving event in mid-April when rewards for successfully adding a block to the Bitcoin blockchain will be cut by 50%, dropping from the existing 6.25 BTC to 3.125 BTC per block.
The halving occurs on the Bitcoin network once 210,000 blocks are created, or roughly every four years. As of writing, the 6.25 BTC will be worth nearly $260,000.
While pointing out why he projects Bitcoin to hit the $125,000 valuation in 2024, Thielen said miners tend to accumulate the cryptocurrency before each halving, which leads to its price increasing by over 200%.
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Fed Rate Cuts and Spot ETF Approvals Could Propel Bitcoin Price Even Further
Meanwhile, leading international banking group Standard Chartered expects BTC to reach six figures before the end of next year due to the “earlier-than-expected introduction” of spot Bitcoin ETFs in the United States.
ETF analysts at Bloomberg are 90% sure that the SEC will approve all 13 pending applications for a spot Bitcoin ETF by January 2024. On November 29, Swiss asset manager Pando Asset became the latest financial firm to submit a proposal for the Bitcoin-focused investment product.
Earlier last week, crypto news outlet CoinDesk reported that between November 17 and December 1, Bitcoin holders had withdrawn 37,000 BTC, equivalent to $1.53 billion, from exchanges to take direct custody of their assets.
The move comes following reports that Federal Reserve chairman Jerome Powell indicated that borrowing interest rates on the US dollar are now well into restrictive territory and the tightening cycle has peaked.
Lucy Hu, the senior analyst at Hong Kong-based crypto asset management firm Metalpha, wrote in an investor note that the intent by the Fed to cut interest rates starting year and expectation of Bitcoin spot ETF approvals “is an official statement of a bull run” that could lead to more upticks” in BTC price in the coming weeks”.
In its Sunday newsletter, crypto data analytics provider Amberdata said Powell’s comments have pushed bond yields lower and gold and crypto higher. Gold futures have reached a record high of $2,087 on the back of the Fed chairman’s comments.
Amberdata added that even without the spot ETF news acting as catalysts, Bitcoin “has been eager to jump along” and the market is “looking to get long”.
At the time of writing, BTC is trading at $41,520 – rising 5.2% in the last 24 hours. At the same time, Ethereum (ETH) also made 18-month-high gains and is currently trading at $2,251 – up 4.1% from the previous day’s price.
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