The price of Bitcoin (BTC) hit $40,000 on Sunday for the first time since early May 2022, while Ethereum (ETH) rose above $2,200 amid a broader – albeit muted – rally in crypto markets.
Bitcoin price has been toying with the $40,000 mark in recent days, but finally broke through it on Sunday and was trading above $40,600 at press time, according to data from CoinDesk Indices, marking a 24-hour increase of about 3% corresponds. Ethereum was trading at $2,205, a similar percentage increase in the last 24 hours. Most of the other top 10 cryptocurrencies by market cap posted smaller gains, although BNB coin, a token linked to the Binance exchange, fell about 0.1% over the past day.
Ethereum also has not traded above $2,200 since May 2022, although it has come close a few times.
As CoinDesk reported earlier this week, Bitcoin holders withdrew 37,000 BTC between November 17 and December 1, suggesting they are taking direct custody of their coins.
The move comes days after gold futures hit a record high of $2,087 after Federal Reserve Chairman Jerome Powell said interest rates were now well into restrictive territory.
“The market is increasingly anticipating a rate cut in the coming year and investors are increasingly optimistic about the prospects for Bitcoin ETF applications from some of the biggest names in asset management,” Lucy Hu, senior analyst at Metalpha, wrote in a note. “This is an official declaration of a bull run and the price could see further upside in the coming weeks.”
Powell's comments reinforced the narrative that the tightening cycle had peaked, sending bond yields lower.
“Cryptocurrencies, on the other hand, have risen significantly along with gold due to lower yields,” crypto data provider Amberdata said in a newsletter on Sunday.
“Bitcoin was eager to jump higher, even if the headline on the spot ETF catalysts doesn’t break, the market is looking to take long positions,” Amberdata added.
Traders have made numerous top options plays in recent weeks, betting that Bitcoin will eventually rise to $45,000 by the end of March 2024.
Next week, US ISM services PMI and non-farm payrolls data for December will be released. A strong NFP number could lead to the Fed withdrawing its 2024 rate cut bets, slowing BTC's rise.
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