Bitcoin prices soared past a whopping $41,000 on Monday, December 4, for the first time since May 2022 just a few weeks after it made headlines for rising past $36,000.
These gains may come as much-needed news due to the drops experienced in 2022 in light of the Crypto Winter whereby many Cryptocurrencies suffered notable losses amidst the FTX collapse, regulatory pressures, and negative market sentiment.
So what’s driving Bitcoin upward and what might the Crypto market’s trajectory look like in the near future? Here’s what you need to know about Bitcoin’s stellar growth:
Bitcoin 2023’s Gains
Despite 2022’s losing streak and Crypto woes, since the beginning of the year and up till the time of the writing Bitcoin (BTCUSD) managed to gain over 151%.
Accordingly, this success is reflected in the Crypto 10 index (Crypto10), an index that gauges the performance of the top 10 Cryptocurrencies in the market and which has risen by more than 94% since the start of the year and up till the time of the writing.
Reasons Behind Bitcoin’s Rebound and Growth
Among the many factors that may have pushed Bitcoin upward, the dovish Fed monetary policy, and the possibility of Bitcoin ETFs are the most prominent.
According to some market analysts, “Bitcoin continues to be supported by optimism around SEC approval for an ETF and Fed rate cuts in 2024.”
Hopes of Rate Cuts
While numerous Central Banks, including the Federal Reserve (FOMC), have recently embraced an ostensibly hawkish stance amid escalating inflation and recessionary concerns, there is a discernible optimism among investors regarding the potential emergence of a more dovish monetary policy.
This optimism stems from observations suggesting a slight easing of inflationary pressures, raising speculation about a possible shift in the Federal Reserve's policy direction.
If the Fed does end up cutting rates, then it could provide Crypto with a bigger boost. This is because higher interest rates usually lead to investors losing confidence in risky financial instruments such as Cryptocurrencies as they may tend to invest in safe-haven assets instead.
Possibility of Crypto ETFs
The possibility of Crypto ETFs has been increasing recently and has made the traction around Cryptocurrencies like Bitcoin even more intense.
The potential realization of Crypto ETFs could lead to their availability on conventional stock exchanges, streamlining regulations and trading processes.
This becomes particularly significant since Cryptocurrencies faced regulatory challenges and pressures in 2022, making Crypto ETFs a potentially beneficial catalyst for the Crypto market.
Nonetheless, it is yet to be determined whether or not Crypto ETFs will be approved, but according to many analysts, the approval could come in 2024. (Source: CNBC)
Where Might Crypto Be Headed Next?
While the trajectory of the Crypto market is still opaque, many scheduled events and factors could play into it
Perhaps one of the most crucial events that could shift the Crypto market and cause volatility in Bitcoin prices is the upcoming Bitcoin Halving event in 2024.
A Bitcoin Halving event occurs every 4 years and cuts/halves Bitcoin production, which, in turn, makes it rarer.
Historically, the price of Bitcoin soared in the past 3 Bitcoin halvings, but only time will tell what this Halving will usher forth to the Crypto market.
In addition, some analysts seem to be bullish as they believe that Bitcoin could rise past $150,000 in 2025.
However, it is important to note that these are predictions and that past performance does not indicate future results.
Bitcoin is still rebounding from 2022’s lows as it soared past $41,000 on Monday. Several factors contribute to the notable shift in Bitcoin's prices.
The growing optimism surrounding a dovish monetary policy and potential rate cuts, coupled with the increasing likelihood of Bitcoin ETFs, are key drivers propelling this prominent Cryptocurrency to higher levels.
Traders will have to wait and see what the future holds for this popular Cryptocurrency.