Bitcoin Tops $42k as Crypto Market Recovers in a Bid to Reach All times High Levels

Ether also crossed the $2,200 mark for the first time in ages.

Bitcoin’s price has crossed the $42,000 mark for the first time since April 2022, reaching levels reminiscent of the period before the Terra crash. Meanwhile, Ether (ETH) has also climbed above $2,200.

For the past couple of days, Bitcoin had been flirting with the $40,000 mark and on Monday, it finally broke through, reaching over $41,600 at the time, marking a 6% increase in the past 24 hours, according to CoinDesk Indices data. Ether also experienced a similar gain, trading at around $2,240.

This surge in cryptocurrency prices has resulted in a positive impact on related stocks. Coinbase (COIN) and MicroStrategy (MSTR) both saw almost 9% increases in pre-market trading, while crypto miners like Marathon Digital (MARA) and Riot (RIOT) recorded gains of over 10%.

Other cryptocurrencies in the top 10 by market capitalization recorded more modest gains, with Binance BNB coin (BNB) showing little change.

Bitcoin, the world’s largest and oldest cryptocurrency, dropped below $40,000 in April 2022 but has been on a rally recently. This upturn is largely attributed to accommodative remarks from US central bankers and optimism surrounding the potential approval of a spot bitcoin exchange-traded fund (ETF) and progress towards the digital pound in the UK.

Similarly, Ether has not seen values above $2,200 since May 2022, though it has come close on a few occasions.

According to CoinDesk, Bitcoin holders pulled out 37,000 BTC between November 17 and December 1, a trend that shows users opting for direct custody of their coins.

The surge in Bitcoin’s value beyond $40,000 coincided with gold reaching a historic peak of over $2,100 per ounce in the early hours of Asian trading. Federal Reserve Chairman Jerome Powell’s dovish comments reportedly triggered this uptick in gold prices.

Lucy Hu, Senior Analyst at Metalpha, highlighted the growing anticipation in the market for a potential rate cut in 2024. Investors are also showing increasing optimism regarding the prospects of Bitcoin ETF applications from major players in the asset management industry.

In a note, Hu stated, “This signals the official commencement of a bull run, and there’s potential for further upward movements in the price in the weeks ahead.” This suggests a positive outlook on both the macroeconomic landscape and the cryptocurrency market, with a potential impact on Bitcoin’s value in the near future.

Last week, Powell emphasized that interest rates have entered restrictive territory, reinforcing the narrative that the tightening cycle has hit limits contributing to the downward pressure on Treasury yields.

In a recent newsletter, crypto data provider Amberdata noted, “Crypto, along with Gold, has been experiencing upward momentum in response to the decline in yields.” Despite the absence of the Spot ETF catalysts headline, Bitcoin has been eager to climb higher, and the market is showing a strong inclination to go long, according to Amberdata.

Traders have been actively engaging in topside option plays in recent weeks, placing their bets on Bitcoin’s potential rise to $45,000 by the end of March 2024.

Looking ahead, the coming weeks will feature US ISM services PMI data and non-farm payrolls for December. A robust NFP figure could lead to the scaling back of expectations for a Fed rate cut in 2024, potentially slowing down BTC’s ascent.

Image Source: Adobe Stock

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.