UPDATED 11:40 EDT / JANUARY 02 2024


Bitcoin exceeds $45,000 as rally anticipates ETF approvals

The price of bitcoin exceeded $45,000 this morning for the first time since April 2022 as the world’s largest cryptocurrency by market capitalization started the new year with a strong start.

The rally is thought to have been triggered by the anticipated approval of exchange-traded spot bitcoin funds.

In early morning trading, bitcoin markets reached $45,802, according to CoinMarketCap, gaining about 155% in total gains in the past year. The market is still below its much-vaunted record high of nearly $69,000 from November 2021, which was also thought to have been sparked by ETF approvals.

The current rally began over the past several weeks, bringing bitcoin into the $40,000 range, in anticipation of the United States Securities and Exchange Commission permitting a number of spot bitcoin ETFs. A report from Reuters said several investment firms, including BlackRock Asset Management, Valkyrie Investments, Bitwise Investments, Invesco Ltd., Fidelity, WisdomTree Investments and a joint venture between Ark Investments and 21Shares all submitted documents.

A spot bitcoin exchange-traded fund, or ETF, would create an investment mechanism that would permit ordinary investors a way to invest in bitcoin in their regular brokerage accounts. This would allow normal investors to enter into cryptocurrency bitcoin markets in a way that they have never been able to before providing a whole new market for bitcoin investment has never existed before.

To date, the SEC has rejected multiple applications to launch bitcoin spot ETFs in recent years citing underlying arguments that cryptocurrency markets are vulnerable to market manipulation. So far, the SEC has only approved ETFs tied to bitcoin and Ethereum futures contracts trading on the Chicago Mercantile Exchange.

According to the Reuters report, the SEC will most likely inform ETF issuers as early as midweek that they have been cleared to launch their funds that they will be able to launch in preparation for a Jan. 10 deadline.

“Investors are looking to imminent growth drivers like Bitcoin ETF approvals and lower interest rates in 2024 as positive indicators that bitcoin will maintain its strength in the markets,” Alex Adelman, co-founder and chief executive of bitcoin rewards app Lolli Inc., told SiliconANGLE. “Ongoing institutional demand, with JP Morgan and Jane Street marked as participants in BlackRock’s recent ETF amendment, has only further intensified interest in bitcoin.”

An event known as “the halving” is also expected to occur sometime in April. It happens once every four years. This event has the bitcoin mining block reward cut in half, which reduces the number of coins entering the network as part of solving complex equations to protect transactions. Previous halving events have been associated with increases in the market value of bitcoin, both before and after the event, because of the anticipated increase in scarcity of the cryptocurrency.

Shares in crypto companies also saw favorable returns ahead of market trading hours. Business intelligence software company MicroStrategy Inc., which is heavily exposed to bitcoin, saw its shares rise 7.8%, crypto miner Marathon Digital’s shares rose 11% and crypto exchange Coinbase Global Inc. shares rose 4.1%.

“Bitcoin’s rally to $40,000 signals a paradigm shift in the financial markets,” said Adelman. “Bitcoin has become accepted as a legitimate, transformative force in the financial markets, up over 60% since September as anticipation of bitcoin approvals builds on the cusp of the new year.”

Image: Pixabay

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