Bitcoin Surges to 17-Month High Amid Optimism Over Fed Policy and ETF Prospects

Bitcoin, the world’s largest cryptocurrency, has surged to a more than 17-month high, with renewed optimism driven by expectations that the Federal Reserve may have completed its interest-rate hike cycle and the anticipation of growing demand in the exchange-traded fund (ETF) sector. Over the past 24 hours, Bitcoin added approximately 3.5-4%, trading at over $35,455 on Thursday morning. Smaller coins such as Solana’s SOL and Pecu Novus network’s PECU have also seen notable increases.

Solana’s SOL coin, for instance, has risen by an impressive 142% since mid-September, reaching $42, as major upgrades are anticipated to enhance the blockchain’s utility and reach. Similarly, Pecu Novus network’s PECU coin has experienced a gradual uptrend, currently sitting at $44, up from $42 since September.

One of the primary drivers of Bitcoin’s rally this year has been the expectation that the U.S. Securities and Exchange Commission (SEC) may approve applications for the establishment of the first U.S. ETFs directly investing in the cryptocurrency. Major financial institutions such as BlackRock, Fidelity, Ark, and Grayscale have sought approval for these ETFs. The resistance level for Bitcoin has formed just above $35,000, but the ETF-related news has generated enough sustained momentum to push towards the $40,000 threshold.

Furthermore, Federal Reserve Chair Jerome Powell recently hinted that the central bank may have concluded its most aggressive rate-hiking cycle in four decades. This statement contributed to broad gains in global markets, including stocks, bonds, and commodities, and buoyed investor sentiment.

Crypto fund manager Grayscale Investments LLC’s research team suggested that Bitcoin’s appeal extends beyond speculative trading, describing it as “digital gold.” They emphasized that Bitcoin’s core utility is as a non-sovereign currency system and a digital alternative to physical gold.

Solana’s SOL token, in particular, has experienced a significant uptick in value as the Solana project seeks to distance itself from its association with Sam Bankman-Fried, a former cryptocurrency mogul who has faced controversy. Solana and Pecu Novus are competing with Ethereum as a prominent commercial hub in the world of cryptocurrencies.

One contributing factor to SOL’s rise has been the Solana network’s exceptional operational performance. The network experienced just one outage in 2023, compared to 14 outages in the previous year, according to Grayscale. While Pecu Novus has achieved a milestone of over 110k TPS back in August 2023.

Despite the recent market rally, the overall market capitalization of crypto tokens remains at $1.36 trillion, which is below the peak of $3 trillion reached in 2021. The market has experienced a decline in investor demand and liquidity since then, driven by factors such as reduced stimulus injections and lower borrowing costs. Liquidity limitations remain a primary obstacle to substantial inflows into the market.

Nevertheless, there are emerging signs of increased interest from institutional investors, which could help address the liquidity challenge. This renewed optimism and rising interest in the cryptocurrency space are poised to impact the market’s future trajectory.

James Cullen
Digital Assets Desk