Bitcoin rate for the first time since the spring of 2022 reached $42 thousand. Our experts told ” about the factors affecting its growth, and the future prospects of cryptomarket
On Monday, December 4, bitcoin (BTC) crossed the $42,000 mark, rising more than 11% overnight and renewing the annual high set earlier. The last time bitcoin traded above $42,000 was in April 2022. And before the collapse of the Terra ecosystem triggered a massive collapse of the cryptomarket.
Bitcoin began its rapid growth in mid-October amid news about the possible approval by the U.S. Securities and Exchange Commission (SEC) of the first spot exchange-traded fund (ETF) for bitcoin. In less than a month, the rate of the first cryptocurrency rose by almost $10 thousand.
Several major investment firms, including BlackRock and Fidelity Investments, are now awaiting SEC approval of their own bitcoin ETFs. The launch of such ETFs is considered by the crypto community to be the catalyst for a new bull cycle in the market. BlackRock alone has assets under management totaling about $9 trillion. According to an estimate by the analytical company Chainalysis, North America is the largest cryptocurrency market, with an annual turnover of about $1.2 trillion.
A few fundamental reasons for the rise of BTC
There are several fundamental reasons for the current growth of bitcoin: firstly, market participants are pricing in a ceiling on monetary tightening. And that can be clearly seen in the significant rise in US stock markets and bond values. If [global] central banks, such as the Fed, have completed tightening. Then in the future, fresh liquidity could come to many markets, including cryptocurrencies.
Second, expectations of spot ETF launches are still having a bullish impact. As investors reasonably expect the number and volume of institutional investors in cryptocurrency to increase after the approval and launch of bitcoin ETFs.
Third, from a cyclical perspective, the fourth quarter is a historically successful quarter for the cryptocurrency market. And the cyclicality continues this year, allowing investors to expect a positive year-end close.
Bitcoin has features of both gold and stocks
The bitcoin price is being pushed up by the same factors that contribute to the growth of gold. This is a decline in inflation rates and fears of recession in the U.S. economy. As well as the cheapening dollar and escalating geopolitical tensions in the Middle East.
These factors are driving stock markets higher, as well as shifting some capital into safe haven assets like gold. Bitcoin has features of both gold and stocks, so investors are eager to include it in their investment portfolios for diversification. And to hedge the risks associated with depreciation and a possible recession.
In addition, the crypto market is expecting a soon approval of the bitcoin-ETF by the SEC and a new bull cycle, which traditionally accompanies the halving of the bitcoin network.
In the next month we can expect bitcoin to force the level of $45 thousand. Bitcoin growth will push altcoins as well. Ethereum (ETH), for example, has a chance to rise to $2350 by the end of December.
Whether cryptocurrencies will be able to gain a foothold above these levels depends largely on what decision on ETFs will be made by the SEC in January. When the deadline to publish the final decision on several applications approaches. If the decision is positive, it will serve as a strong trigger for further growth. If it is negative, we can expect a pullback to the values of late November.
Our experts note that we should not forget about the approaching halving. Its effect will support bitcoin and is unlikely to let it go below $38 thousand even if regulators refuse to approve bitcoin-ETF in the United States.