Bitcoin Hits $40,000 Level for the First Time Since May 2022

(Bloomberg) — Bitcoin scaled $40,000 for the first time since May 2022 as the largest digital asset extended a rebound on expectations of interest-rate reductions and greater demand from exchange-traded funds.

Most Read from Bloomberg

The token added about 1% to trade at $40,005 as of 7:22 a.m. on Monday in Singapore, taking its 2023 jump to 142%. Bitcoin was last at $40,000 before the TerraUSD stablecoin collapse that contributed to a rout in digital assets and a daisy chain of collapses in the crypto sector.

Investors are increasingly convinced the Federal Reserve is done with rate hikes as inflation cools, turning the focus to the likely extent of cuts next year. The changed backdrop has fueled a rally across global markets.

The digital-asset industry is also awaiting the outcome of applications from the likes of BlackRock Inc. to roll out the first US spot Bitcoin ETFs. Bloomberg Intelligence expects a batch of such funds to win Securities & Exchange Commission approval by January.

“Bitcoin continues to be supported by optimism around SEC approval for an ETF and Fed rate cuts in 2024,” Tony Sycamore, a market analyst at IG Australia Pty, wrote in a note. Technical chart patterns point to $42,330 as the next level to watch for, he added.

Bitcoin’s rebound from the 2022 crypto crash has weathered a US crackdown that put Sam Bankman-Fried behind bars for fraud at FTX and handed top crypto exchange Binance and its founder Changpeng Zhao rap sheets and big fines.

Optimists argue 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.

A reset in rate bets or unexpected snarls for the ETFs could yet derail Bitcoin, but for now the market mood is upbeat.

One of the props for sentiment is the so-called Bitcoin halving due next year, 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 last 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 $69,000 in November 2021.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.

Leave a Comment