On Monday, the value of stocks connected to cryptocurrencies in the U.S. rose significantly, continuing the positive trend seen in November. This increase coincided with Bitcoin surpassing $42,000, marking a new high for the year.
Additionally, on the same day, Bitcoin achieved its highest price in nearly 20 months, and gold reached a new all-time high. These movements were influenced by widespread speculation among investors that interest rates will decrease next year, impacting various global assets.
Shares of companies connected to cryptocurrency have experienced a significant increase in recent weeks. This upward movement is driven by optimism regarding potential interest rate cuts in the U.S. Additionally, traders are placing bets on the imminent approval of U.S. stock market-traded bitcoin funds.
Traders report that the increasing desire to buy bitcoin, which has seen a significant rise in value over the past month, is also driven by a growing interest among investors. T.
Bitcoin increased by 4.1% to $41,649, reaching its highest point since April 2022 and hitting $42,162 earlier in the session. A market analyst stated that if an ETF (investment fund) gets approval, it could make investing in bitcoin more regulated, attractive, and simpler. Currently, there’s a positive trend in the market, and bitcoin is benefiting as interest rates decline. There’s also optimism about next year, with some seeing it as a favorable time for bitcoin due to an event called “halving.”
Despite concerns from traders, Binance has not been shut down by US authorities. However, Binance is currently facing a separate lawsuit from the Securities and Exchange Commission (SEC) for allegedly violating securities laws.
What is bitcoin again ?
Bitcoin, the pioneer in cryptocurrencies, was introduced in 2009. Cryptocurrencies are digital tokens that use unique technology for fast payments without involving banks or payment processors. The person who created bitcoin goes by the name Satoshi Nakamoto.
Unlike regular money, cryptocurrencies like bitcoin can be used to make online purchases or kept as an investment, similar to stocks. However, it’s important to be cautious because the value of cryptocurrencies can be very unpredictable, and investing in them carries risks, as advised by Charles Schwab, an investment firm.
There are more than 11,000 different cryptocurrencies available, but in terms of dollars, bitcoin is the most valuable. It holds the highest market capitalization among all digital assets, as indicated by data from the crypto price tracker CoinGecko.
Why is bitcoin surging now?
Bitcoin’s recent rise in value can be attributed to various factors. One significant factor is the expectation that major investment firms could soon receive approval to offer spot bitcoin exchange-traded funds (ETFs). These ETFs function like special investments that can be bought and sold similarly to stocks. It appears that government approval for several bitcoin ETFs might happen as early as January, potentially making crypto investment more accessible for regular people, as mentioned by Moody’s senior product director Yiannis Giokas.
With more investment managers entering the bitcoin ETF space, both everyday investors and larger ones may find it more reassuring to put their money into bitcoin, even if they typically approach investments with caution.
Another contributing factor to the rise in bitcoin prices is the growing belief on Wall Street that the Federal Reserve, the central bank of the United States, will not increase interest rates anymore. There’s even speculation that they might make it a bit easier for people to get money, which could benefit the overall economy. This increased confidence makes bitcoin more appealing as an investment.
When interest rates drop, more investors tend to put their money into riskier assets, such as cryptocurrencies.
Greg Magadini from crypto data firm Amberdata notes that “Lower rates are bullish for bitcoin,” indicating that lower interest rates are considered positive for bitcoin.
Yiannis Giokas anticipates that 2024 could be a significant year for bitcoin, serving as an indicator for the overall health of the cryptocurrency market. He points out that in 2021, whenever bitcoin reached $40,000, it was followed by a surge in market activity, known as a bull run. Giokas expects a similar trend to happen again.