Bitcoin Maintains Momentum Above $43,000 Amidst ETF Excitement and Federal Reserve Speculations

Bitcoin held steady above $43,000, enjoying its lengthiest winning streak since May, prompting speculation about whether this rally reflects bets on a more lenient Federal Reserve monetary policy. Over the course of six days until Tuesday, the leading digital asset surged by approximately 16%, maintaining its gains in early European trading on Wednesday. This marks a 163% rebound in 2023 from the cryptocurrency slump of the previous year.

The primary driver behind this rally is the anticipation of the U.S. greenlighting its first spot Bitcoin exchange-traded funds (ETFs), potentially broadening the investor base. BlackRock Inc. and Fidelity Investments eagerly await the outcome of their applications, with January being a speculated timeframe for approval. However, since June, when asset managers started seeking approval for ETFs, the excitement surrounding this development has led some to question whether Bitcoin’s surge is now more closely tied to speculations about Federal Reserve rate cuts in the coming year.

Tony Sycamore, a market analyst at IG Australia Pty, suggests that the ETF narrative might already be factored into Bitcoin’s price. He sees Bitcoin’s rapid ascent as a reminder that the cryptocurrency is highly responsive to shifts in Federal Reserve policy compared to other asset classes.

Despite concerns, Bitcoin’s momentum currently overshadows fears of an overstretched surge. Other cryptocurrencies like Avalanche and the meme-crowd favorite Dogecoin are also experiencing upward momentum. The overall optimistic sentiment extends globally, with Bitcoin trading about 4% higher on South Korea’s Upbit and Bithumb exchanges, reviving the “kimchi premium” observed during the pandemic-era bull run. Additionally, the debut of crypto-related listing Phoenix Group Plc in Abu Dhabi saw a 35% jump, marking the Middle East’s first such listing. In El Salvador, Nayib Bukele announced profitable Bitcoin investments this week, further boosting market sentiment. The upcoming Bitcoin halving, set to reduce miners’ token rewards, is another factor contributing to the positive outlook, according to Zach Pandl, managing director of research at Grayscale Investments LLC.