Leading cryptocurrencies hit multi-month highs
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Leading cryptocurrencies have updated multi-month highs. Thus, Bitcoin was approaching the level of $45 thousand, the maximum since April 2022. In two months, the world’s main cryptocurrency increased in price by 60%. The reason for the bullish play was the expectation of the imminent registration of exchange-traded funds (ETFs) for Bitcoin. Market participants expect that several ETFs will appear at the beginning of 2024. But even if the American regulator does not agree on their rules again, the market should support the next reduction in the Bitcoin mining reward (halving), scheduled for April 2024.
At the end of last week, the price of Bitcoin (BTC) reached $44.7 thousand, the highest since April 2022, according to CoinMarketCap.com. Ethereum (ETH) quotes exceeded $2.4 thousand, the highest since May 2022. Solana, Cardano and Dogecoin also updated their highs since last year. This is already the third wave of growth in the virtual currency market since mid-October. Bitcoin is up 60%, up 15% since early December. Ether has risen in price by more than 50% since mid-October, and by almost 15% since the beginning of December.
The main driving force in the cryptocurrency market was the expectation of registration of exchange-traded funds for leading cryptocurrencies by the American regulator Securities and Exchange Commission (SEC).
The head of InDeFi Smart Bank, Sergei Mendeleev, considers the approval of spot ETFs for at least Bitcoin and Ether “already inevitable.” As Roman Nekrasov, co-founder of the ENCRY Foundation, notes, if the SEC decides to approve a Bitcoin ETF, it will give the green light to several applications at once, so as “not to create a situation of monopoly advantage in the market.” The SEC always has the opportunity to postpone the publication of the decision, “which the American regulator invariably uses,” he clarifies, but each application also has its own deadline, when the commission must give a final decision and can no longer be postponed.
According to the analytical platform IntoTheBlock, currently in line for document approval are BTC-ETFs from Grayscale, Invesco Galaxy, ARK (all with a deadline in January 2024), Hashdex, Franklin Templeton (with a deadline in March 2024), as well as Pando Asset. BitRiver financial analyst Vladislav Antonov believes that if the BTC-ETF is launched, we can expect a significant influx of funds from institutional investors into this market and further growth in quotes.
Experts add that the Fed’s monetary policy is also stimulating the growth of the cryptocurrency market. According to Roman Nekrasov, against the backdrop of a decline in inflation rates in the United States to 3% on an annual basis, everyone expects an end to “the increase in the key rate and a transition to its gradual reduction.” But since inflation has not yet reached the target level of 2%, the Fed is in no hurry to lower the key rate, he explains. This creates risks of a recession in the United States, that is, slow economic growth with fairly intense inflation.
Fear of asset depreciation is pushing market participants to transfer some capital to hedge risks into defensive assets such as gold. Cryptocurrencies are also used for these purposes, since with their high volatility they can also show high profitability, notes Mr. Nekrasov.
Additional support for the market was the expectation of the next Bitcoin halving (reduction of the mining reward) in April 2024. As Vladislav Antonov notes, players are already buying BTC in anticipation of an increase in the rate after the supply of new coins decreases.
As a result, some market participants believe that there are reasons for Bitcoin to continue to grow in the coming weeks and by the end of the year the price of the leading cryptocurrency could reach $50 thousand. Mr. Antonov clarifies that “the rally has already passed, but there is little room for growth.”
However, there are also risks of taking profits before the holidays. In addition, as Roman Nekrasov notes, if the regulator again refuses to launch a Bitcoin ETF, the rate of the leading currency could return to $40 thousand, although it is unlikely to fall lower.
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