Bitcoin Breaches $40,000… $50,000 Next?

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Bitcoin recently extended its impressive rally, reaching its highest value in over a year on Monday. This surge was primarily driven by the growing optimism surrounding the potential approval of a bitcoin exchange-traded fund (ETF) and the anticipation of interest rate cuts in the U.S.

Experiencing a significant boost, the world’s leading cryptocurrency soared by over 5% on Monday, achieving a 19-month peak. The value of Bitcoin stood momentarily surpassed the $42,000 mark earlier in the day.

Notably, this marks the first occasion since April 2022 that Bitcoin has crossed the $40,000. Since the beginning of the year, Bitcoin has witnessed an extraordinary increase of more than 145% in its value. And it’s the #1 performing asset class of the year.

This remarkable recovery comes in the wake of several market-shaking scandals, including the notorious collapse of the crypto exchange FTX in November of the previous year. In a significant development last month, FTX founder Bankman-Fried was convicted on all seven criminal charges related to the downfall of his cryptocurrency empire.

With Bitcoin revisiting the $40,000 level for the first time in nearly 19 months, the $48,000 and $52,000 thresholds are now seen as the next major milestones, according to Antoni Trenchev, the co-founder of digital asset company Nexo.

Recent reports from CNBC revealed that last week, officials from the U.S. Securities and Exchange Commission (SEC) had discussions with representatives from Grayscale, BlackRock, and Nasdaq. During these meetings, the potential transformation of the Grayscale Bitcoin Trust into an ETF was a key topic of discussion.

Although the SEC had previously impeded this move, Grayscale successfully contested this decision in court, winning the case. This legal victory has significantly bolstered market confidence, fueling speculation that a bitcoin ETF might eventually receive approval, thereby contributing to the ascent of Bitcoin's value.

The pace at which Bitcoin approaches the $50,000 mark could largely hinge on the timing of a spot-Bitcoin ETF approval. However, even with the much-anticipated green light from the SEC, there is no certainty that it will act as a catalyst for a dramatic increase in price, observed Trenchev.

On December 1, during a fireside chat, Federal Reserve Chairman Jerome Powell indicated that it is premature to discuss interest rate cuts at present. He emphasized that the Federal Reserve will maintain a restrictive policy stance until there is clear evidence that inflation is consistently returning to the 2% target.

“Like most forecasters, my colleagues and I anticipate that growth in spending and output will slow over the next year, as the effects of the pandemic and the reopening fade and as restrictive monetary policy weighs on aggregate demand,” Powell stated, according to a transcript. His remarks led to speculation that the Federal Reserve might pause its series of interest rate hikes that have been ongoing since March 2022, which have dampened economic activity.

However, Powell also cautioned that it is too soon to confidently assert that the Federal Reserve has reached a sufficiently restrictive policy position, leaving the door open for potential future rate hikes.


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