Bitcoin prices broke through the $44,000 mark after the cryptocurrency posted its longest gain since last May, raising speculation about whether the gains reflect investors' growing confidence that the Federal Reserve is preparing to ease its monetary policy.
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The cryptocurrency considered the largest digital asset in the crypto sector achieved a 6-day series of gains through Tuesday, rising about 16%, and consolidated its gains in early Asian trading on Wednesday. Its total gain since the start of 2023 is about 165%, compared to the low levels reached amid the cryptocurrency crisis last year.
Much of this rise can be attributed to the potential of the US allowing the launch of the first exchange-traded fund to invest directly in Bitcoin, paving the way for a wider investor base to participate. Among the companies that have applied for permission to launch cryptocurrency funds are BlackRock and Fidelity Investments. Some analysts predict the fund will be allowed to launch next January.
But the support generated by expectations of Bitcoin ETF launches has been visible since last June, when asset management firms began seeking the green light to launch ETFs. This has led to some speculation about whether the new cryptocurrency rally is now gaining strength from increased bets on a US interest rate cut next year.
Bitcoin price and US interest expectations
“Investors are definitely considering the potential of launching an exchange-traded fund that invests directly in Bitcoin,” said Tony Sycamore, market analyst at IG Australia, “but this time there is huge volatility and a big spike in Bitcoin prices.” The response of cryptocurrencies is more towards expectations of changes in direction and monetary policy of the Fed. It is more impacted by these changes than any other asset class.”
Bitcoin's recovery tempts investors back into the cryptocurrency
Bitcoin's current rise also masks concerns that it will significantly exceed expected limits. Smaller cryptocurrencies such as Ethereum, Avalanche and Dogecoin, which are favored by meme investors, have also seen their prices rise.
Bitcoin's jump shows the market's reaction to the launch of a cryptocurrency trading fund
In Abu Dhabi, shares of the “Phoenix” group, which sells cryptocurrency mining devices, jumped 35% yesterday, Tuesday, in its first trade after the IPO, thus becoming the first company listed in the cryptocurrency sector in the Middle East.
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