“Bitcoin Surges Above $42,000, Reaching 18-Month High Despite Recent Cryptocurrency Industry Controversies”
While the cryptocurrency sector grapples with recent scandals and controversies, bitcoin, the leading digital token, is experiencing a resurgence. On Monday, the value of bitcoin climbed to nearly $42,000, marking the first time in 18 months that the digital currency surpassed the $40,000 threshold, as reported by CoinDesk Indices.
This rebound comes amid lingering concerns in the industry, highlighted by last year’s high-profile collapse of crypto exchange FTX and the subsequent legal actions against its founder, Sam Bankman-Fried. Additionally, Binance, the world’s largest cryptocurrency exchange, recently agreed to a $4.3 billion settlement for violating U.S. laws related to money laundering and sanctions violations.
Despite these challenges, bitcoin’s price has surged by 150% this year, although it remains below the peak of around $69,000 reached in late 2021.
Bitcoin, created in 2009, is the first cryptocurrency, functioning as a digital token that facilitates instant peer-to-peer payments without the need for intermediaries like banks or payment processors. It can be used for online purchases and serves as an investment vehicle. However, the volatile nature of crypto prices poses risks for investors, according to investment firm Charles Schwab.
With over 11,000 cryptocurrencies available, bitcoin holds the highest value in dollar terms and boasts the largest market capitalization among digital assets, according to CoinGecko.
Several factors contribute to the recent surge in bitcoin prices. Notably, there are indications that major investment firms are on the verge of obtaining regulatory approval to offer spot bitcoin exchange-traded funds (ETFs). These ETFs, expected to receive regulatory approval in January, could enhance accessibility to crypto investments for a broader range of investors.
Another factor supporting bitcoin prices is the growing belief on Wall Street that the Federal Reserve has completed its interest rate hikes due to receding inflation. There is even speculation that the central bank may start loosening monetary policy by mid-2024 to support economic stability. Lower interest rates often prompt investors to seek higher returns in riskier assets like cryptocurrencies.
Greg Magadini, Director of Derivatives at crypto data firm Amberdata, noted that “lower rates are bullish for bitcoin.” Yiannis Giokas, a Senior Product Director at Moody’s, believes that 2024 could be a significant year for bitcoin, following historical patterns where reaching $40,000 has often preceded bullish runs.