On Monday morning, the price of Bitcoin reached $40,000 for the first time since May 2022. Bitcoin, as the largest digital asset, continued its rebound this year due to expected interest rate cuts and increased demand from Exchange-Traded Funds (ETFs).
As of writing, the trading price of Bitcoin is $40,068.70 with a year-to-date increase of 137.01%. The last time Bitcoin reached $40,000 was before the collapse of TerraUSD stablecoin, which led to a series of collapses in digital assets and the cryptocurrency industry.
With inflation cooling down, investors are increasingly believing that the Federal Reserve has ended its rate hikes and shifted focus to possible rate cuts next year. This change in background has driven a global market rebound. According to CME FedWatch Tool, it is widely expected that benchmark rates will be lowered to 4%-4.25% by the end of next year.
Meanwhile, the digital asset industry is also awaiting results on applications from companies like BlackRock Inc., for launching the first batch of US spot Bitcoin ETFs. Bloomberg Intelligence predicts that a group of Bitcoin funds will receive approval from the US Securities and Exchange Commission (SEC) before January next year.
Tony Sycamore, Market Analyst at IG Australia Pty wrote in a report: “Bitcoin continues to be supported by optimism surrounding SEC-approved ETFs and potential interest rate cuts by the Federal Reserve next year.” He added that technical chart patterns point towards $42,330 as the next level worth watching.
After bouncing back from last year’s crypto crash, Bitcoin has experienced some setbacks such as Sam Bankman-Fried being jailed for fraudulent activities on FTX exchange. However,the efforts made to curb uncertainty within the industry and recent surge in ETF applications indicate that cryptocurrency industry is maturing and may be adopted more widely.
MicroStrategy,the publicly traded company holding most Bitcoins globally,bought an additional $593 million worth of Bitcoin last month, bringing its total holdings to approximately $6.5 billion. Michael Novogratz, founder of Galaxy Digital Holdings Ltd., stated last Wednesday that Bitcoin could reach its 2021 peak in a year’s time when it briefly surged to $69,000.