- Bitcoin surged past $40,000, hitting levels last seen in May 2022, driven by optimism from dovish U.S. central bank comments and hopes for a spot Bitcoin ETF approval.
- Ethereum also rose above $2,200, marking a broader crypto market rally, while traders anticipate further gains with a focus on economic indicators such as U.S. ISM services PMI and non-farm payrolls in the week ahead.
The price of Bitcoin (BTC) breached the $40,000 mark on Sunday, reaching levels not seen since early May 2022. Simultaneously, Ethereum (ETH) also experienced an upward surge, surpassing $2,200. The broader crypto market witnessed a subdued yet noteworthy rally, with several top-10 cryptocurrencies showing modest gains.
As of press time, Bitcoin was trading above $40,600, marking a 24-hour rise of approximately 3%, according to data from CoinDesk Indices. Ethereum, too, exhibited a similar percentage increase, trading at $2,205. Notably, the BNB coin, affiliated with the Binance exchange, was down about 0.1% over the past day, contrasting with the positive trend observed in most other major cryptocurrencies.
Why the sudden surge?
Bitcoin’s recent climb beyond $40,000 follows days of flirting with this key level. The surge has been attributed to optimistic sentiments stemming from seemingly dovish comments made by U.S. central bankers. Additionally, there is growing anticipation regarding the potential approval of a spot Bitcoin exchange-traded fund (ETF) in the United States, fueling bullish expectations among investors.
The world’s oldest cryptocurrency had dipped below the $40,000 threshold in April 2022 but has demonstrated a strong rally in recent months. Ethereum, too, had not surpassed $2,200 since May 2022, making this recent breakthrough a notable development for the second-largest cryptocurrency by market capitalization.
Recent data reported by CoinDesk revealed that Bitcoin holders withdrew a substantial 37,000 BTC between November 17 and December 1, indicating a preference for direct custody of their assets. This move aligns with a broader trend of increased confidence in cryptocurrency ownership.
The surge in cryptocurrency prices also coincided with a record high in gold futures, which reached $2,087 after Federal Reserve Chairman Jerome Powell suggested that interest rates have entered restrictive territory. This assertion has fueled expectations of a rate cut in the coming year, contributing to the bullish outlook on Bitcoin.
Lucy Hu, Senior Analyst at Metalpha, commented,
“The market is increasingly expecting a rate cut in the coming year and investors are increasingly bullish on the outlook of Bitcoin ETF applications by some of the biggest names in asset management […]This is an official statement of a bull run, and the price could see more upticks in the coming weeks.”Lucy Hu’s comments
The recent comments by Powell, signaling a potential end to the tightening cycle, have resulted in lower bond yields. Crypto data provider Amberdata noted in a newsletter, “Crypto, on the other hand, has been moving nicely higher, along with Gold, on the back of lower yields.” This sentiment has contributed to Bitcoin’s upward trajectory, even without the anticipated catalyst of a Spot ETF announcement.
What to expect
Traders are positioning for further gains, with topside option plays suggesting a bet on Bitcoin reaching $45,000 by the end of March 2024. However, the week ahead presents potential market-moving events, including U.S. ISM services PMI data and non-farm payrolls for December.
A strong non-farm payrolls figure might lead to a reevaluation of Fed rate cut expectations for 2024, potentially slowing Bitcoin’s ascent. The crypto market remains dynamic, with investors closely monitoring these economic indicators for potential impacts on cryptocurrency prices in the weeks to come.