Bitcoin surged to a high not seen in 17 months, as investor sentiment was buoyed by hopes that the Federal Reserve might have finished hiking interest rates, and that new demand may be about to enter the market from the exchange-traded fund industry.
The oldest cryptocurrency jumped 4% in just 24 hours, trading at $35, 840 as of 10:54 AM Thursday in Singapore. Other lesser tokens also were on the rise, including the Solana network’s SOL token, which has gained 142% since the middle of September, reaching $42.
So far this year Bitcoin has gained more than 100%, partly due to bets that the Securities and Exchange commission may approve applications which would allow companies like BlackRock Inc. to open Exchange Traded Funds which would invest directly in the cryptocurrency.
Michael Safai, a partner of proprietary trading firm Dexterity Capital LLC noted that “resistance” firmed up at around $35,000 “but there’s enough sustained momentum around the ETF news to make some runs toward $37,000.”
At the same time, US Federal Reserve Chair Jerome Powell has indicated the regulator may have concluded the most aggressive period of monetary tightening in 40 years. That delivered broad gains Thursday in the global markets in stocks, bonds, and commodities.
Meanwhile crypto fund manager Grayscale Investments LLC made the case that Bitcoin is benefiting from a perception among investors that it is a sort of “digital gold.” In a note, the firm’s research team wrote that “Bitcoin’s core use case is as a non-sovereign money system and digital alternative to physical gold.”
SOL has risen as the Solana project has sought to transition past its connections to the former crypto-mogul Sam Bankman-Fried. Solana is now competing with Ethereum, the key commercial highway for crypto, for a bigger share of digital asset activity.
One factor driving up the value of SOL is its “robust operational performance” according to Grayscale, which pointed out in 2023 the network had only one outage, compared with 14 in 2022.
CoinGecko data shows that amid the current run, the overall market value of crypto tokens has rallied, rising to $1.36 trillion. At its height, in 2021, the total market value of the industry was $3 trillion.
Since then, investor demand and liquidity have fallen, as stimulus injections and low borrowing costs that drove the formation of a bubble in digital assets have dissipated.
In the Crypto is Macro Now newsletter, Noelle Acheson wrote, “The relative lack of liquidity is the main barrier to strong inflows for now, as it raises the risk of slippage coming in and the ability to exit if necessary.”
However she notes that incipient signs of interest from institutional investors are becoming more pronounced, and that could help solve the liquidity issue.
