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Bitcoin is surging on expectations that the US regulators will soon approve a long-awaited bitcoin spot ETF.
The price of bitcoin soared above $40,000 on Monday, hitting its highest level in 18 months as investors look ahead to a lower interest rate environment and key regulatory approvals that could make the crypto asset more mainstream.
Bitcoin, the world’s most popular cryptocurrency, was up more than 5% over the past 24 hours, trading at $41,600, according to CoinMarketCap.
On Friday, Investors began piling on after Federal Reserve Chair Jerome Powell said the central bank’s policy was “well into restrictive territory,” words that some interpreted to mean that interest rate hikes were over, even though Powell underscored the Fed was prepared to raise rates again if needed.
“Bitcoin breaking $40,000 isn’t as juicy as the first time it happened in January 2021,” said Antoni Trenchev, co-founder of the crypto lender Nexo. “Yet consider where we were a year ago, at $15,500, and this is a significant upturn in fortunes for an asset that looked dead and buried.”
The rally also reflects investors’ eagerness to move on from crypto’s most recent scandals. Last month, Changpeng Zhao, the billionaire founder of the world’s largest cryptocurrency exchange, Binance, pleaded guilty to federal money-laundering charges and resigned from his role as CEO. That came just weeks after a jury convicted FTX co-founder Sam Bankman-Fried of orchestrating a multibillion-dollar fraud.
Bitcoin is now up 150% for the year, though it remains far from its historical high of $69,000 in November of 2021.
Part of the enthusiasm hinges on expectations that the Securities and Exchange Commission will approve a bitcoin-focused exchange-traded fund, or spot ETF. The SEC faces a January 10 deadline to approve applications for such funds.
A spot bitcoin ETF would allow traditional investors to have exposure to the digital asset without actually owning it. The market has long desired a way to ride the digital asset’s wild rallies, but its volatility has also made owning bitcoin unappealing outside of the digital asset community.