Sign up to our free weekly IndyTech newsletter delivered straight to your inbox
Sign up to our free IndyTech newsletter
Bitcoin is trading at its highest price level in nearly two years after a strong start to 2024.
The cryptocurrency reached above $45,000 (£35,000) on Tuesday for the first time since April 2022, largely buoyed by anticipation surrounding the potential approval of exchange-traded spot bitcoin funds.
The US Securities and Exchange Commission is currently considering several bitcoin ETFs, which would open the crypto market to major institutional investors and serve as a validation for bitcoin as a mainstream asset.
Despite years of speculation, the regulator is yet to approve a single bitcoin ETF. There are currently 13 under consideration, with some crypto analysts believing that a more matured market could finally see at least one of them approved.
The decisions were expected to be made in December, however delays have further fueled hope for a positive outcome.
Some analysts have warned that the bitcoin ETF may be a case of “buy the rumour, sell the news”, meaning any announcment from the SEC could be followed by a sharp price decline for bitcoin.
Matteo Greco, an analyst at the digital asset investment firm Fineqia International, said a bitcoin ETF approval could see “a retracement of lower price levels before we go up again”.
Mr Greco also predicted that a rejection could also trigger a “short-term negative price action”.
The strong start to 2024 follows bitcoin’s best year since 2020, with gains of 158 per cent taking the cryptocurrency’s market cap close to $900 billion, and the overall crypto market above $1.75 trillion.
Bitcoin remains a long way off its all-time high of $68,000, which was hit after a record-breaking rally culminating in November 2021.
Industry commentators also noted that bitcoin’s resurgence has been more steady this time, hinting at a stronger foundation built from a catastrophic 2022 that saw high-profile crypto projects and exchanges collapse.
“Ongoing institutional demand, with JP Morgan and Jane Street marked as participants in BlackRock’s recent ETF amendment, has only further intensified interest in bitcoin,” Alex Adelman, CEO of crypto app Lolli, told The Independent.
“Bitcoin’s ability to hold its position above the $40,000 mark suggests sustained confidence among investors and a foundation for further upward momentum.”
Some investors believe a new record high could occur in 2024 following an event known as a “halving”, which will see the amount of new bitcoins received by miners cut in half.
Scheduled for April 2024, the three previous halving events in bitcoin’s history have all been profitable events for investors.
