Bitcoin’s price hovers above $43,000, completing its longest winning streak since May, prompting speculation about its connection to Federal Reserve policy bets. The digital asset’s six-day climb, a 16% increase, has sparked questions if it reflects anticipation of looser monetary policies. The rally, fueled by the potential approval of US spot Bitcoin exchange-traded funds (ETFs), has analysts questioning if the ETF narrative is already priced in, suggesting Bitcoin’s responsiveness to Federal Reserve shifts might be the driving force. Despite concerns, Bitcoin’s momentum remains strong, overshadowing potential risks, with global bullish sentiment and upcoming events supporting its ascent.
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Bitcoin Hovers Above $43,000 After ‘Jet-Fueled’ 16% Six-Day Jump
By Sunil Jagtiani
(Bloomberg) —
Bitcoin hovered above $43,000 after its longest winning run since May amid questions about whether the breakout is becoming emblematic of wagers on looser Federal Reserve monetary policy.
The largest digital asset climbed for six days through Tuesday, adding roughly 16%, and was consolidating the gains in early European trading on Wednesday. Its 2023 rebound from last year’s crypto rout now stands at 163%.
Much of the rally is pegged to the prospect of the US allowing its first spot Bitcoin exchange-traded funds, paving the way to a wider investor base. BlackRock Inc. and Fidelity Investments are among those awaiting the outcome of their applications, with some analysts expecting a green light by January.
But ETF hype has shadowed Bitcoin since June, when asset managers began seeking approval to roll out the funds. That’s leading some to ask if the token’s surge is now drawing more succor from wagers on Fed rate cuts next year.
Read more: Why Crypto Is Counting on Spot Bitcoin ETFs: QuickTake
“Surely the ETF story is well and truly priced?” said Tony Sycamore, a market analyst at IG Australia Pty. The high volatility, “jet-fueled” move up in Bitcoin is instead a reminder that crypto is “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 Avalanche and meme-crowd favorite Dogecoin have also been advancing.
‘Kimchi Premium’
The bullish overall mood is evident across a range of countries. Bitcoin on South Korea’s Upbit and Bithumb exchanges at one point was trading about 4% 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 Plc jumped 35% 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’s running for reelection 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 LLC.
Bitcoin dipped less than 1% to $43,525 as of 6:23 a.m. in London, approximately $26,000 below its 2021 record of almost $69,000.
Read also:
🔒Bitcoin’s Meteoric Rise: Hype or hedge in an uncertain economic landscape?
Bitcoin skyrockets 140%, targets $40,000 amid ETF buzz and market optimism
Tech guru Stafford Masie admits to being ‘Bitcoin befok’ ahead of ETF launch
© 2023 Bloomberg L.P.
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