What is the reason for Bitcoin’s 19-month high at $38.8 thousand?

On December 1, the bitcoin rate updated its 19-month high and reached $38.8 thousand. According to experts, the current growth is associated with investor optimism regarding the slowdown in inflation in the United States and a possible reduction in the Fed’s key rate. Positive dynamics are also supported by upcoming changes in industry regulation. In December, Bitcoin has a chance to test the level of $45 thousand, analysts predict.

According to Coinmarketcap, the bitcoin rate on December 1 renewed its 19-month high at $38.8 thousand. By the end of the day, it lost some value, falling to $38.2 thousand. Other cryptocurrencies also grew in price, although at a more moderate pace. Ethereum (ETH) rose 2.5% and approached the $2.1 thousand mark. Cardano and Polygon, as well as memecoins, including Dogecoin and Shiba Inu, are also participating in the upward trend.

The current growth of bitcoin is mainly associated with investor optimism regarding the slowdown in inflation in the United States and a possible reduction in the Fed key rate, says Anton Toroptsev, regional director of CommEX in Russia and the CIS.

This, he said, will push risky assets, which include cryptocurrencies and stocks, to grow. In addition, the crypto market expects growth in anticipation of halving (a planned reduction in newly issued coins) on the Bitcoin network, the expert added. The rise in price of bitcoin may be due to the growing technological difficulties of mining, noted the head of PR and communications at EMSV Mike Lvov.

Also, in conditions of market fatigue from the protracted crypto winter, investors’ hopes are fueled by upcoming changes in regulation of the industry, Mr. Lvov believes. Despite the fact that tightening regulation will lead to additional restrictions for both cryptocurrency users and businesses, in general this is fertile ground for the influx of institutional capital, he points out. In particular, investor optimism may be driven by the possible approval of the first spot Bitcoin exchange-traded fund (ETF) in the United States, says Roman Nekrasov, co-founder of the ENCRY Foundation. There is a high proportion of unprofessional retail investors in the crypto market, notes Anton Toroptsev, which is partly due to high volatility, since market participants are more susceptible to emotional purchases and sales of assets than professional traders and investors.

But Mr. Nekrasov draws attention to the absence of significant rollbacks in the price movement of Bitcoin. And this may indicate its strong purchasing power and the fact that the market is at an early stage of growth, the expert believes.

In the absence of negative events, a decline below $35 thousand is unlikely, Mr. Nekrasov expects.

However, the real problem for Bitcoin, according to the expert, remains its ability to gain a foothold above the important level of $38 thousand. Historical data shows that the price of Bitcoin has repeatedly overcome this level, but not for long.

In December, before the New Year, Bitcoin has every chance of exceeding the $40 thousand mark and gaining a foothold, as well as testing the $45 thousand level, Mr. Toroptsev believes. He allows Bitcoin to continue to rise throughout December. “This is the so-called Santa Claus rally. A correction is possible in January, but in general, investors in the crypto market are full of optimism,” he emphasized. Mr. Toroptsev is convinced that “a lot depends on the regulatory atmosphere regarding cryptocurrencies in the United States” and if optimistic forecasts come true, then in the next six months we can expect an increase in the value of Bitcoin and the overall capitalization of the crypto market. The expert recalled that when Bitcoin grows, other cryptocurrencies traditionally grow, many of which even surpass Bitcoin in growth rates.

Ksenia Kulikova