Bitcoin made an impressive start to the New Year by surging above $45,000 on Tuesday, marking its highest level since April 2022. The world’s largest cryptocurrency experienced a remarkable 156% gain in the previous year, achieving its most robust yearly performance since 2020. Currently trading at $45,727, Bitcoin remains below its November 2021 record high of $69,000.
Ether, the cryptocurrency associated with the Ethereum blockchain network, also witnessed a positive trend, registering a 2.6% increase to reach $2,414 on Tuesday. In 2023 alone, Ether has surged by an impressive 91%.
In the U.S. premarket trading, crypto-related stocks closely tracking Bitcoin prices experienced notable gains. Companies such as Riot Platforms (RIOT.O), Marathon Digital (MARA.O), CleanSpark (CLSK.O), Coinbase (COIN.O), and MicroStrategy (MSTR.O) saw increases ranging from 6.3% to 14.8%, rebounding from declines in the final trading days of 2022.
Investor attention is focused on the potential approval of exchange-traded spot Bitcoin funds by the U.S. Securities and Exchange Commission (SEC). The approval of such funds is anticipated to open the market to a broader investor base and attract significant investments.
Despite previous rejections due to concerns about market manipulation, there are growing indications that the SEC may approve some of the 13 proposed spot Bitcoin ETFs, with expectations for a decision in early January.
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Chris Weston, the head of research at Pepperstone, emphasized the clear-cut market reaction to potential rejection and the possibility of a substantial increase in the event of approval. The dynamics of a “buy-the-rumor, sell-on-fact” scenario or a sustained upward momentum will depend on the regulatory decision.
The positive rise in the cryptocurrency market is also attributed to rising speculation about major central banks cutting interest rates in the coming year. This factor has helped dispel the gloom that had overshadowed crypto markets following the collapses of FTX and other crypto-related businesses in 2022.
There is optimism for continued gains in crypto markets in 2024, as Bitcoin has historically performed well during U.S. election years. Markus Thielen, founder of digital asset research firm 10x Research, pointed to Bitcoin’s previous strong performances during U.S. election years, aligning with the Bitcoin halving cycles in 2012, 2016, and 2020.
