Bitcoin takes off fueled by ETF and interest rate hopes
Published: Wednesday, Dec 6th 2023, 10:40
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The price of Bitcoin is approaching the USD 45,000 mark. In addition to the hope that key interest rates may fall again and the prospect of an eagerly awaited decision on exchange-traded funds (ETFs) on the cryptocurrency, Bitcoin is making substantial gains.
On Wednesday morning, Bitcoin was trading at 43,780 dollars, a good 14% higher than in the previous week. The market capitalization has thus risen by over 100 billion dollars to 853 billion within a week.
This was the first time since April 2022 that Bitcoin had surpassed the USD 42,000 mark. In the last 30 days alone, it has risen by around 25%. Since the beginning of the year, it has now risen by almost 165%.
Bankruptcies overcome
Around a year ago, the price had fallen to almost 15,000 dollars. At that time, turbulence on the crypto market in connection with the FTX crypto exchange, among other things, had triggered a price collapse. However, many investors seem to have long since put the billion-dollar bankruptcies behind them.
The current gains are also increasingly being supported by the interest rate environment. According to observers, the markets are increasingly assuming that interest rates could be cut again next year. This is good news for risk assets such as Bitcoin.
ETF hopes
Blockchain currencies such as Bitcoin or Ether are also benefiting from the increasing likelihood of ETF funds being approved in the US. This would also allow institutional investors to invest directly in Bitcoin on a broad front. Experts believe that approvals by the US Securities and Exchange Commission at the beginning of the new year are conceivable.
However, the rise could also come to an abrupt end in the event of positive ETF decisions. For example, Mathieu Ziaei, portfolio manager at Swiss investment manager Criptonite Asset Management, sees a possible "buy the rumor, sell the fact" event in the current upward trend. In other words, the euphoria of an approval could quickly turn into major counter-movements as investors take profits on a large scale.
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