Bitcoin surges past $42,000 as crypto gathers momentum
According to a Dec. 3 Bloomberg report, Bitcoin topped $42,000 on Monday, extending its rally of over 150% since the start of 2023. The leading cryptocurrency is now at levels not seen since April 2022, before last year’s massive $2 trillion crypto market crash.
Bitcoin’s resurgence comes amid growing optimism that the Federal Reserve is nearing the end of its rate hike cycle as inflation shows signs of cooling. This has driven a risk-on rally across global financial markets. Investors are betting rate cuts could come in 2024, boosting risky assets like crypto.
“Bitcoin continues to be supported by optimism around SEC approval for an ETF and Fed rate cuts in 2024,” said Tony Sycamore, an analyst at IG Australia Pty. Technical indicators suggest $42,330 as the next resistance level to watch if the rally continues.
Crypto’s recovery
Other major cryptocurrencies like Ether, Dogecoin, and Bitcoin Cash also jumped on Monday, with a market cap gauge of the top 100 cryptos rising over 5%.
Crypto’s recovery comes despite recent upheavals like the FTX collapse that led to fraud charges against founder Sam Bankman-Fried. A regulatory crackdown has tried to curb shady activities, with Binance and its CEO Changpeng Zhao also facing penalties.
But optimists argue the push for stricter rules signals the maturation of a $1 trillion industry. Investor confidence has grown on expectations that the first Bitcoin spot ETFs will likely gain SEC approval in early 2023. Products from giants like BlackRock could further expand crypto’s investor base.
Lingering risks remain
An unexpected halt of the rate-cut expectations fueling markets could sink Bitcoin. And technical gauges suggest the powerful rally may be overstretched and due for a correction. Bitcoin’s RSI momentum indicator is flashing warning signs of being “overbought.”
Still, after previous overbought signals, Bitcoin historically continued powering higher over the next month. Its 2023 breakout has already surpassed gains for assets like stocks and gold.
The scheduled 2024 Bitcoin “halving” event, which cuts the token rewards for miners in half to cap supply, is another major upside catalyst on the horizon.
“We could see Bitcoin run toward $50,000 before any major correction,” predicts blockchain adviser Cici Lu McCalman, citing the halving and policy outlook.
Featured Image Credit: Photo by Crypto Crow; Pexels
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