Bitcoin has risen above $40,000 for the first time this year, riding a wave of momentum fueled by widespread optimism about US interest rate cuts and traders anticipating the forthcoming approval of US-stock market-traded bitcoin ETFs.
The world’s biggest currency reached a high of $40,210 in Sunday trade, its highest since April 2022. In limited trade early in Asia on Monday, it remained constant at $40,011.
“We’ll see if it sticks throughout the day, but bitcoin loves a break of big psychological levels, so it excites the bit-bugs again and adds to this momentum,” said Capital.com analyst Kyle Rodda.
Bitcoin has more than doubled in value this year, breaking out of the doldrums of the so-called “crypto winter” that accompanied scandals like the collapse of exchange FTX last year.
Riskier investments and other interest-rate-sensitive assets, such as gold, have also surged over the last few weeks as markets bet that the U.S. Federal Reserve has ended hiking rates and will begin cutting early in 2023.
Reports in October that the Securities and Exchange Commission will not appeal a court verdict that determined the agency was erroneous to deny an exchange-traded fund application from crypto startup Grayscale Investments fueled speculation that approval is imminent.
A spot bitcoin ETF, the reasoning goes, would provide previously skeptical investors access to cryptocurrency through the stock market, ushering in a new surge of wealth.
Ether, the cryptocurrency linked to the Ethereum blockchain network, also touched a one-and-a-half-year high on Sunday, reaching $2,218 before settling at $2,197 in Asia on Monday.
Bitcoin and ether are still trading significantly below their 2021 record highs of over $60,000 and $4,000, respectively.
