Financial markets experienced a seismic shift on Monday as gold executed a remarkable turnaround, surging beyond an all-time high of $2,100 per ounce. Meanwhile, traditional stocks and bonds navigated a turbulent day.
In contrast to the chaos, the world’s largest cryptocurrency, Bitcoin, soared to new heights, surpassing $41,000 for the first time in over a year. This marked an astonishing 150% growth in its value for the year.
Bitcoin’s journey in the cryptocurrency realm has been a rollercoaster. Emerging from the pandemic at just over $5,000, it skyrocketed to around $68,000 in November 2021. However, it experienced a sharp decline due to multiple Federal Reserve rate hikes and the collapse of FTX, a key player in the cryptocurrency market.
Monday witnessed a resurgence, fueled by optimism surrounding potential approval from the US Securities and Exchange Commission (SEC) for exchange-traded funds (ETFs) directly investing in Bitcoin.
Yiannis Giokas, Senior Director at Moody’s Analytics, highlighted the correlation between the rise in Bitcoin’s price and the surge in applications for SEC-approved spot BTC ETFs. Speculation about this development has contributed to Bitcoin’s revival, reaching its highest level since April 2022 at $42,144 before settling at $41,803 by 4 p.m. in New York.
Beyond Bitcoin’s surge, other cryptocurrencies like Dogecoin, Bitcoin Cash, and Ether also experienced significant gains.
In a departure from the market trend, US companies associated with cryptocurrencies exhibited resilience. Coinbase Global Inc. saw a 5.5% surge, Marathon Digital Holdings Inc. experienced an 8.6% increase, and Bitcoin proxy MicroStrategy Inc. rose by 6.7%.
Anticipation looms over the outcome of applications from major financial institutions, including BlackRock Inc., seeking to introduce the first Bitcoin ETFs in the US. Despite past regulatory challenges and crackdowns, optimism prevails in the industry, suggesting potential maturity and broader investor engagement.
However, amid Bitcoin’s phenomenal ascent, concerns persist. Changes in interest rate expectations or issues with anticipated ETFs could potentially trigger a collapse in the current surge. Technical indicators also raise questions about the sustainability of Bitcoin’s gains, suggesting that the rally may have reached overextended levels.