Bitcoin’s ‘jet-fuelled’ jump pushes token above $US44,000
Bitcoin’s longest winning run since May lifted the token past $US44,000, raising questions about whether the breakout increasingly reflects a conviction that looser US Federal Reserve monetary policy in the world’s largest economy is ahead.
Bitcoin has extended its rally to top the $US44,000 level. Bloomberg
The largest digital asset climbed for six days through to Tuesday (Wednesday AEDT), adding roughly 16 per cent, and was consolidating the gains in early Asian trading on Wednesday. Its 2023 rebound from last year’s crypto rout is now 165 per cent.
Much of the rally is pegged to the prospect of the US Securities Exchange Commission approving the first spot bitcoin exchange traded funds, paving the way to a wider investor base. BlackRock and Fidelity Investments are among those awaiting the outcome of their applications, with some analysts expecting a green light from the regulator by January.
But ETF hype has shadowed bitcoin since June, when asset managers began seeking approval to roll out the funds. That is leading some to ask if the token’s surge is drawing more succour from increasing bets of the Fed cutting rates next year.
“Surely, the ETF story is well and truly priced?” said Tony Sycamore, a market analyst at IG Australia. The high-volatility, “jet-fuelled” move up in bitcoin was instead a reminder that crypto was “more responsive to a Fed pivot and policy than other asset classes”, he said.
For now, bitcoin momentum is overshadowing any concerns that the surge is at risk of becoming too stretched. Smaller virtual currencies such as ether, avalanche and meme-crowd favourite dogecoin have also been advancing.
The halving effect
The bullish overall mood is evident in a range of countries. Bitcoin on South Korea’s upbit and bithumb exchanges was trading about 4 per cent above the prevailing global price on Wednesday, a return of the so-called “kimchi premium” that made headlines during the pandemic-era bull run in digital assets.
In Abu Dhabi, crypto mining hardware retailer Phoenix Group jumped 35 per cent on its debut on Tuesday. The firm is the first crypto-related listing in the Middle East.
In El Salvador, Nayib Bukele said in a posting on X this week that the nation’s bitcoin investments had turned profitable. He is running for re-election after stepping down as president last week.
Another prop for sentiment is the so-called bitcoin halving due next year, which will cut in half the amount of tokens that bitcoin miners receive as reward for their work.
The quadrennial event is part of the process of capping bitcoin supply at 21 million tokens. The coin hit records after the last three halvings.
“Both micro and macro factors are currently lining up for bitcoin,” said Zach Pandl, managing director of research at crypto fund provider Grayscale Investments.
Bitcoin was little changed at $US43,851 as of 10.16am in Singapore, still $US25,000 below its 2021 record of almost $US69,000.
Bloomberg
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