Bitcoin has started 2024 on a high note, surpassing the $45,000 mark for the first time since April 2022. Ether, the world’s second biggest cryptocurrency, also experienced a rise, trading around $2,367, marking daily gain of 1%.
The surge comes amid growing geopolitical tensions in the Middle East and increasing optimism about the approval of the first spot Bitcoin exchange-traded fund (ETF) in the United States.
The world’s largest cryptocurrency reached an intraday high of $45,913 early Tuesday. The spike was partly attributed to Bitcoin’s perceived role as a hedge against uncertainty, a sentiment strengthened by recent geopolitical events, including an attack on a Maersk vessel by Houthi militants.
A major driver of Bitcoin’s six-month rally has been the rumors of an ETF approval in the U.S. This development would enable investors to track Bitcoin’s price through a regulated financial product without owning the cryptocurrency directly, which is particularly appealing to institutional investors.
On Friday, BlackRock and other applicants updated their ETF registration forms, fueling speculation that the SEC’s decision might be imminent. Many industry experts are expecting approval as early as January.
Bitcoin’s price gains follow a strong performance in 2023, where it rose 157%. The momentum is expected to continue into 2024, with investors looking forward to the Bitcoin halving in the spring, an event historically associated with price increases.
Additionally, the cryptocurrency market has been buoyed by rising expectations that major central banks might reduce interest rates this year. This prospect, coupled with the U.S. election year, which historically aligns with Bitcoin’s halving cycles and positive performance, has injected renewed optimism into the crypto markets. The market is still recovering from the gloom of the FTX collapse and other crypto business failures in 2022.
Other cryptocurrencies have also shown mixed reactions, with Ether, the second-largest token, rising as much as 4.1%, while Solana experienced a 2.2% decline.
