Bitcoin Soars Past $42k as Traders Bet on U.S. Bitcoin ETF Approval and 2024 “Halving”

John Smith

Bitcoin reached its highest level since April 2022 this week, surpassing $42,000 at one point on Monday, as cryptocurrency traders bet on potential interest rate cuts in 2023 and the long-awaited approval of a U.S. stock market-traded bitcoin fund.

Bitcoin Price 4 December 2023

The recent rally has fueled substantial gains for cryptocurrency-exposed stocks, with the likes of Coinbase and MicroStrategy seeing their share prices spike over 60% and 50% respectively in November alone.

Traders are pricing in prospects of easing monetary policy next year, while also anticipating significant tailwinds from bitcoin’s pre-programmed supply reduction mechanism known as “the halving” in early 2024.

Bitcoin Hits Fresh 2022 High as Macroeconomic Hopes Build

Bitcoin hit a 2022 peak of $42,162 on Monday before stabilizing around the $41,500 level, representing a 4% daily gain. The world’s largest cryptocurrency by market capitalization has added over 25% in the past month alone as expectations shift around the direction of Federal Reserve policy.

Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, noted that falling bond yields are contributing to bitcoin’s rally as investors warm up to riskier assets. The 10-year Treasury yield has fallen close to 3.5% from over 4.2% in late October.

“There is also this positive bullish sentiment into next year because it is going to be the year of halving,” Ozkardeskaya added.

Bitcoin’s quadrennial halving events cut the cryptocurrency’s issuance rate in half, slowing the pace of new supply entering circulation. Previous halvings in 2012 and 2016 prefaced massive bitcoin bull runs, with prices rallying thousands of percent in the ensuing years.

Read More: Bitcoin Bulls Call for $100K in 2024 as Crypto Winter Thaws

Traders Anticipate U.S. Approval of Bitcoin ETF

The prospect of easier access to bitcoin exposure from U.S. exchanges has also boosted positive sentiment.

While Canada and Europe have several bitcoin exchange-traded funds (ETFs) already, U.S. regulators have repeatedly rebuffed applications for bitcoin ETFs due to concerns around manipulation and illicit usage.

However, Cryptocurrency industry leaders have ramped up lobbying efforts this year to sway the Securities and Exchange Commission (SEC). With bitcoin rallying and crypto adoption accelerating, the environment for an approval appears increasingly positive.

“The impact of an (ETF) approval is going to be big in terms of investment appetite because it’s going to be more easily regulated, more attractive and easier to invest,” Ozkardeskaya explained. “What we have right now is a risk rally, and bitcoin is also benefiting big time from falling yields.”

U.S.-Listed Crypto Stocks Extend Blistering Rallies

U.S. stocks with heavy cryptocurrency exposure rallied on Monday after explosive gains in November. Shares of Coinbase, the largest American crypto exchange, jumped 7.5% after having already surged nearly 62% last month despite reporting a decline in trading volumes.

MicroStrategy, a business intelligence firm that has accumulated vast bitcoin reserves in recent years, saw its stock climb 8.2% on the session. The company made additional purchases of 7,002 bitcoins in November valued at $593 million, raising its total holdings to more than 132,000 bitcoins.

A trio of popular bitcoin mining stocks also registered double-digit percentage increases on Monday, as Riot Platforms, Marathon Digital, and CleanSpark rallied between 10% and 19%. Bitcoin miners receive newly created coins as rewards for supporting the cryptocurrency’s proof-of-work blockchain network.

Investor Appetite for Crypto Accelerates in 2022

Cryptocurrency markets endured turbulence for much of 2022 amidst high inflation and tightening financial conditions. However, investor appetite appears to be resurging in recent months even with lingering macroeconomic uncertainties.

The total market capitalization for cryptocurrencies has regained the $1 trillion threshold, reaching its highest levels since the summer. Bitcoin dominance is also rising, indicating that institutional capital is consolidating in larger perceived safe havens relative to alternative crypto assets.

While regulatory concerns continue to crop up intermittently, the underlying momentum of crypto technology appears robust. Blockchain-based innovations show no signs of slowing across finance, gaming, identity solutions, supply chain tracking, and decentralized forms of governance.

As wealth and assets digitize over the coming decade, cryptocurrencies seem poised for expanded utility and ever-broadening adoption by individuals and enterprises alike. Though progress may not always be linear, the long-term trajectory looks compelling as burgeoning sectors like crypto stand ready to help define the digital future.

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John Smith is a veteran stock trader with over 10 years of experience in the financial markets. He is a widely followed market commentator known for his astute analysis and accurate predictions. John has authored multiple bestselling books explaining complex market concepts in simple terms for novice investors looking to grow their wealth through strategic trading and long-term investments.
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