Bitcoin surpasses $41,000 to reach 19-month high

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On Monday, Bitcoin rose over five percent to hit a 19-month peak of $41,809. This marks the first time since April 2022 that Bitcoin has crossed the $40,000 level, as reported by the London Stock Exchange Group (LSEG). Bitcoin has climbed more than 150 percent since the beginning of the year.

The surge was supported by expectations of a Bitcoin exchange-traded fund (ETF) approval and speculation about U.S. interest rate reductions. This follows market turbulence caused by scandals, such as the collapse of the crypto exchange FTX in November last year. Recently, FTX founder Bankman-Fried was convicted of all seven criminal charges linked to the downfall of his cryptocurrency business.

“Now that $40,000 has been revisited for the first time in almost 19 months, $48,000 and $52,000 look to be the next significant lines in the sand,”

Antoni Trenchev, Nexo co-founder Nexo Antoni Trenchev.

Last week, the U.S. Securities and Exchange Commission (SEC) engaged in discussions with representatives from Grayscale, BlackRock and the Nasdaq.

The SEC had a meeting with Grayscale on Thursday regarding the potential transformation of the Grayscale Bitcoin Trust into an ETF. This raised market confidence in the potential approval of a bitcoin ETF, causing the price of the world’s largest cryptocurrency to increase.

“How swiftly Bitcoin marches towards $50,000 might well depend on when a spot-Bitcoin ETF is approved and even then, there’s no guarantee the much anticipated nod from the SEC will put a rocket booster under the price,” said Trenchev.

Bitcoin’s rise amid market sentiments

According to Financial Times, Bitcoin’s rise comes after a recent rush into stocks and bonds, driven by the belief that the U.S. Federal Reserve will likely reduce borrowing costs soon, despite Chair Jerome Powell’s statement cautioning that it is premature to determine if the central bank has effectively managed inflation.

“Like most forecasters, my colleagues and I anticipate that growth in spending and output will slow over the next year, as the effects of the pandemic and the reopening fade and as restrictive monetary policy weighs on aggregate demand,” he said.

Traders anticipate the possibility of the initial rate cut as early as March 2024, following a significant drop in government and corporate borrowing rates.

“You look at bitcoin and gold and you see a very similar kind of evolution,” said Pictet Asset Management chief strategist Luca Paolini. “All the asset classes that tend to do well when the Fed cuts rates aggressively are doing well.”

BlackRock, Franklin submitted fillings with ETC

Wall Street’s big investors like BlackRock and Franklin Templeton have recently joined companies like VanEck and WisdomTree in submitting filings to the SEC.

The market sees spot bitcoin ETFs as a method to shift control of digital assets from troubled crypto organizations to more established businesses like BlackRock.

“ETF speculation is going to continue to drive behaviour in the crypto market this week as investors buy into the narrative of the transformative impact opening the market to institutional investors will have on the ecosystem,” said Simon Peters, market analyst at eToro.

Investors are optimistic about the SEC potentially approving a Bitcoin ETF in the upcoming weeks. For the past decade, the regulator has consistently rejected spot Bitcoin ETFs, which are stock market funds directly investing in the cryptocurrency.