Bitcoin rises above $42,000 for first time since April 2022 (updated)

Fineqia International

03/12/2023 23:04

* 
      Bitcoin and ether hit 2023 highs
    

        * 
      Interest rate cut bets and ETF approval optimism driving
gains
    

        * 
      Increasing institutional engagement adding to Bitcoin
ascent,
says investor
    

  
 (Updates prices throughout, adds analyst comment in paragraph
13)
    By Tom Wilson, Tom Westbrook and Chibuike Oguh
       LONDON/SINGAPORE/NEW YORK, Dec 4 (Reuters) - 
    Bitcoin rose on Monday, briefly surpassing $42,000 to reach
a 20-month high, in a new surge of momentum fueled by U.S.
interest rate cut expectations and traders betting that American
regulators will soon approve exchange-traded spot bitcoin funds.
  
    The world's biggest cryptocurrency  BTC=BTSP  rose to
$42,162, its highest since April 2022, seemingly casting off the
gloom that had settled over crypto markets following the
collapse of FTX and other crypto-business failures last year. It
was up 8.27% at $42,005  BTC=BTSP  as of 20:00 GMT.
    Bitcoin's gains lifted the shares of cryptocurrency-related
companies, as well as exchange-traded funds (ETFs) listed in the
United States.
    Coinbase  COIN.O  jumped 7% and Microstrategy  MSTR.O 
gained 6.3%, while bitcoin miners such as Riot Platforms
 RIOT.O , Marathon Digital  MARA.O  and CleanSpark  CLSK.O  rose
between 7% and 13%. Last week, Microstrategy  MSTR.O  disclosed
it bought an additional $593 million in bitcoin during November.
   
    The ProShares Bitcoin Strategy ETF  BITO.N , which tracks
bitcoin futures, rose 7.5%, while the ProShares Short Bitcoin
Strategy ETF  BITI.N  that allows traders to bet on a fall in
bitcoin futures dropped 7.5%.
    Bitcoin's "remarkable ascent" can be attributed to a
"confluence of factors" that were buoying sentiment, Luuk
Strijers, chief commercial officer of crypto derivatives
exchange Deribit, wrote in a note on Monday.
    He cited widespread optimism that the U.S. securities
regulator may soon approve a spot bitcoin ETF, which would throw
open the bitcoin market to millions more investors. Abating
inflation would lead central banks to begin easing rate hikes,
making riskier assets more attractive, he said, and noted a
steady increase in institutional engagement.
    Bitcoin is up by more than 150% so far this year. 
    Riskier investments and other interest-rate sensitive
assets, such as gold, have also rallied hard over the last few
weeks as markets wager that the U.S. Federal Reserve has
finished hiking rates and will start cutting early in 2024.
    Reports in October that the U.S. Securities and Exchange
Commission (SEC) would not appeal a court ruling that the agency
had been wrong to reject its spot bitcoin ETF application have
also driven bets that an eventual approval is near.
    SEC Chair Gary Gensler said in October the agency's
commissioners would potentially consider as many as 10 bitcoin
ETF filings, but could not provide guidance on timing.
    A spot bitcoin ETF could allow previously wary investors
access to crypto via the tightly regulated stock market. Demand
is expected to be as much as $3 billion in the first few days of
trading, and pull in billions more thereafter.
        Investors are confident the SEC could approve multiple
spot bitcoin ETFs as early as January, based on key public SEC
filing and comment deadlines, Matteo Greco, research analyst at
digital asset investment firm Fineqia International, wrote in a
note.
  
        "An approval is expected to bring short-term capital
influx from the traditional finance investors."
  
    Investors have also welcomed the settlement of a years-long
U.S. criminal probe into Binance, the world's largest crypto
exchange and a key cog in the worldwide crypto market.
    The deal, in which Binance founder Changpeng Zhao stepped
down after pleading guilty to breaking U.S. anti-money
laundering laws, allows the company to continue operating.
    Ether  ETH=BTSP , the coin linked to the Ethereum blockchain
network, rose more than 6% on Monday, hitting $2,274.88.
    Both bitcoin and ether remain far below their 2021 record
highs of $69,000 and $4,868, respectively.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Bitcoin back above $40k    https://tmsnrt.rs/3GtBpys
Bitcoin rallies on positive momentum    https://tmsnrt.rs/3Tan41o
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Tom Wilson and Elizabeth Howcroft in London,
Hannah Lanag in Washington, Chibuike Oguh in New York, Nilutpal
Timsina in Bengaluru and Tom Westbrook in Singapore; Additional
reporting by Brigid Riley in Tokyo; Editing by Chizu Nomiyama,
Sonali Paul, Sam Holmes, Michelle Price, Emelia
Sithole-Matarise, Bernadette Baum, Alex Richardson and Richard
Chang)
 ((tom.westbrook@tr.com; +65 6973 8284))