Bitcoin went above $40,000 on Monday in Asia for the first time this year. This happened because people were expecting the approval of a bitcoin exchange-traded fund and predicting that the U.S. would reduce interest rates.
The biggest cryptocurrency in the world increased by more than 4% on Monday in Asia, reaching a 19-month high. It traded as high as $41,520 at 12:30 am ET, according to Coin Metrics data. This is the first time since May 2022 that bitcoin has gone beyond the $40,000 mark, according to LSEG. Overall, bitcoin has increased by more than 145% since the beginning of this year.
Issues with FTX, Bitcoin Price Targets, and SEC’s Involvement in ETF Approval
This follows a series of controversies in the market, including the downfall of the FTX cryptocurrency exchange in November of last year. In the previous month, the founder of FTX, Bankman-Fried, was declared guilty of all seven criminal charges linked to the collapse of his cryptocurrency business.
“With $40,000 being reached again after nearly 19 months, the next crucial points to watch are $48,000 and $52,000,” mentioned Antoni Trenchev, who is the co-founder of the digital asset company Nexo.
Last week, an official report from the U.S. Securities and Exchange Commission (SEC) had discussions with representatives from Grayscale, BlackRock, and the Nasdaq.
The SEC held a meeting with Grayscale on Thursday to talk about the possibility of transforming the Grayscale Bitcoin Trust into an ETF. Initially, the SEC had rejected this idea, but Grayscale contested the decision in court and emerged victorious.
This development increased confidence in the market that approval for a bitcoin ETF might happen in the future, causing the price of the world’s largest cryptocurrency to rise.
Antoni Trenchev commented, “How quickly Bitcoin moves toward $50,000 could hinge on when a spot-Bitcoin ETF gets approval. However, even with the much-anticipated approval from the SEC, there’s no guarantee it will significantly boost the price.”
Federal Reserve Chairman About Monetary Policy and Interest Rates
In a conversation on December 1, Federal Reserve Chairman Jerome Powell mentioned that it’s premature to discuss reducing interest rates at the moment. He said that the central bank will maintain a “restrictive” policy until there’s confidence among policymakers that inflation is consistently reaching the 2% target.
Powell stated, “Similar to many analysts, my colleagues and I expect a slowdown in spending and economic output in the coming year. This is due to the diminishing impact of the pandemic and reopening, coupled with the influence of restrictive monetary policies on overall demand.”
His statements raised the likelihood that the Federal Reserve has likely completed its recent trend of increasing interest rates, considering that the series of rate hikes since March 2022 has impacted economic activity.
However, Powell also mentioned that it is too early to confidently state that a restrictive stance has been adequately achieved. He suggested that additional rate hikes could still be a possibility.
Summary
Bitcoin surpassed $40,000 in Asia, driven by expectations of a Bitcoin ETF and potential U.S. interest rate cuts, reaching a 19-month high. The FTX controversy and SEC discussions on ETFs further influenced market sentiment. Meanwhile, Federal Reserve Chairman Powell hinted at a possible end to rate hikes, signaling caution amid economic uncertainties.
