The value of Bitcoin surpassed $40,000 on Sunday, marking its highest point in 19 months. Ethereum also experienced an increase, exceeding $2,200, driven by growing anticipation of potential US interest rate reductions.
Traders interpreted recent actions taken by the US against crypto exchanges Binance and FTX as indications of an imminent approval of stock market-traded Bitcoin funds.
Bitcoin has been gaining momentum, attempting to emerge from the “crypto winter,” reaching a peak of $40,210 in Sunday’s trading and advancing to $41,414, a nearly 3.4% increase, in Asian trades on Monday.
The surge in Bitcoin prices aligns with a broader trend of increased activity in riskier investments and other assets sensitive to interest rates, such as gold. Markets speculate that the US Federal Reserve has concluded its rate hikes and will initiate cuts early in 2023.
Ether, associated with the Ethereum blockchain network, also achieved an 18-month high. However, both Bitcoin and Ether remain well below their 2021 record highs of $60,000 and $4,000, respectively.
BNB coin, linked to the Binance exchange, experienced a slight decline of about 0.1%, contrasting with gains observed in other top-10 cryptocurrencies by market capitalisation.
Following remarks by Federal Reserve Chairman Jerome Powell, stating that interest rates have entered restrictive territory, gold futures reached a record high of $2,087.
Lucy Hu, Senior Analyst at Metalpha, commented, “The market anticipates a rate cut in the coming year, and investors are increasingly optimistic about the prospects of Bitcoin ETF applications by some of the largest names in asset management. This signals an official declaration of a bull run, and the price could see further increases in the coming weeks.”