Bitcoin hits US$40,000 level for first time since May 2022
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Bitcoin traded at US$40,099 as at 6.35am on Dec 4 in Singapore, taking its 2023 jump to 142 per cent.
PHOTO: REUTERS
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Bangkok – Bitcoin has hit US$40,000 for the first time since May 2022 as the largest digital asset extended 2023’s rebound on expectations of interest rate reductions and greater demand from exchange-traded funds (ETFs).
The token added as much as 2.9 per cent to reach US$40,867 and was just shy of that mark as at 10.33am on Dec 4 in Singapore, taking its 2023 jump to 146 per cent.
Bitcoin was last at such levels in April 2022, before the TerraUSD stablecoin collapse
Investors are increasingly convinced the United States Federal Reserve is done with rate hikes as inflation cools, turning the focus to the likely extent of cuts in 2024. The changed backdrop has fuelled a rally across global markets.
The digital asset industry is also awaiting the outcome of applications from the likes of BlackRock to launch the first US spot Bitcoin ETFs.
Bloomberg Intelligence expects a batch of such funds to win US Securities and Exchange Commission (SEC) approval by January.
“Bitcoin continues to be supported by optimism around SEC approval for an ETF and Fed rate cuts in 2024,” Mr Tony Sycamore, a market analyst at IG Australia, wrote in a note. Technical chart patterns point to US$42,330 as the next level to watch for, he added.
Bitcoin’s rebound from 2022’s crypto crash has weathered a US crackdown that put Sam Bankman-Fried behind bars for fraud at FTX
Optimists argue that the drive to curb questionable practices and the flurry of ETF applications signal a maturing industry and the potential for a widening investor base for digital assets.
Recent enforcement actions “have instilled confidence among investors”, said Ms Chia Su Yen, co-founder of the Asia Crypto Alliance.
Bitcoin “is aping momentum in traditional finance with Fed rate-hike expectations fading”, she added.
A reset in rate bets or unexpected snarls for the ETFs could yet derail Bitcoin, while some technical indicators suggest the virtual currency’s rally is stretched.
In the short term, “long” trader positioning implies that further price appreciation may be harder to come by, crypto fund provider Grayscale Investments’ research team wrote in a Dec 1 note.
Still, the financial and economic backdrop is set to stay positive for digital assets, the team added.
Bitcoin’s jump in 2023 has outstripped assets such as global stocks and gold.
One prop for sentiment is the so-called Bitcoin halving due in 2024, which will cut in half the amount of tokens that Bitcoin miners receive as reward for their work.
The quadrennial event is part of the process of capping Bitcoin supply at 21 million tokens. The coin hit records after each of the past three halvings.
Bitcoin and smaller tokens such as Ether and BNB are still some way below the all-time highs achieved during the pandemic-era crypto bull run.
The largest token peaked at almost US$69,000 in November 2021.
The lift in digital asset prices at the start of the week filtered across crypto-linked stocks in Asia.
Japan’s Monex Group and Woori Technology Investment in South Korea were among the beneficiaries.
In the United States, crypto exchange Coinbase Global and software firm MicroStrategy – the largest publicly traded corporate holder of Bitcoin – are both up more than 270 per cent year to date.
MicroStrategy in November bought US$593 million more of the token, taking its pile to roughly US$6.5 billion. BLOOMBERG
