Bitcoin’s value surged above $40,000 on Monday, marking its highest level in 18 months as investors anticipate a crypto-friendly environment with low-interest rates and awaited regulatory approvals that could propel cryptocurrency into mainstream prominence.
As per CoinMarketCap, Bitcoin, the world’s most popular cryptocurrency, traded at over $41,600, reflecting a more than 5% increase in the last 24 hours.
On Friday, Federal Reserve Chair Jerome Powell stated that the central bank’s policy was “transitory in nature,” prompting investors to start depositing, with some interpreting this as a sign of the end of rate hikes, although Powell emphasized the Fed’s readiness to raise rates if necessary.
Co-founder of crypto lending platform Nexo, Antony Trenchev, remarked, “The breaking of the $40,000 barrier for Bitcoin is not as intriguing as it was in January 2021.” He added, “However, consider where we were a year ago, at $15,500, and this is a significant leap in fortune for an asset that was being written off.”
The recent rallies also indicate investors’ eagerness to move past the recent scandals in the crypto world. In the last month, Changpeng Zhao, founder of the world’s largest cryptocurrency exchange, Binance, resigned as CEO amidst allegations of federal money laundering, followed by the indictment of Sam Bankman-Fried, co-founder of FTX, for allegedly running a multi-billion-dollar fraud.
Bitcoin has now risen by 150% for the year, although it remains far from its historic high of $69,000 in November 2021.
The excitement hinges partly on the hope that the Securities and Exchange Commission will approve Bitcoin-centric exchange-traded funds (ETFs) or spot ETFs. The SEC faces a deadline of January 10th to deal with applications for such funds.
A spot Bitcoin ETF would allow traditional investors to invest in digital assets without actual ownership, offering a way for markets to gain control over the relentless rallies of digital assets for an extended period. However, its volatility has made ownership of Bitcoin unappealing to the traditional investment community.