Bitcoin Tops $42K as Crypto Market Recovers to Pre-Terra Levels

Bitcoin Tops $42K as Crypto Market Recovers to Pre-Terra Levels

Ether also rose past $2,200 for the first time in months.

The price of bitcoin (BTC) moved past $42,000 for the first time since April 2022 – a level not seen since before the crash of Terra – while Ether (ETH) moved past $2,200.

Bitcoin’s price had been toying with the $40,000 level in recent days, but finally breached it Monday to trade above $41,600 as of press time, according to CoinDesk Indices data, a 24-hour rise of about 6%. Ether was trading around $2,240, a similar percentage gain.

The advance spurred crypto stocks higher, too. Crypto exchange Coinbase (COIN) jumped almost 9% in pre-market trading, as did Microstrategy (MSTR). Crypto miners such as Marathon Digital (MARA) and Riot (RIOT) added more than 10%.

The other top 10 cryptocurrencies by market capitalization marked smaller gains, and BNB coin (BNB), a token affiliated with the Binance exchange, was little changed.

The price of the world’s largest and oldest cryptocurrency fell below $40,000 in April 2022, and has been rallying over the past few months largely due to seemingly dovish comments from U.S. central bankers and hopes that a spot bitcoin exchange-traded fund (ETF) may be approved to launch in the country.

Ether had similarly not traded hands above $2,200 since May 2022, though it's come close a few times.

Bitcoin holders withdrew 37,000 BTC between Nov. 17 and Dec. 1, suggesting they were taking direct custody of their coins, CoinDesk reported earlier this week.

Bitcoin's move above $40,000 comes as gold hit a record high of over $2,100 per ounce during the early Asian trading hours in response to dovish comments from Federal Reserve chairman Jerome Powell.

“The market is increasingly expecting a rate cut in the coming year, and investors are increasingly bullish on the outlook of Bitcoin ETF applications by some of the biggest names in asset management,” wrote Lucy Hu, Senior Analyst, Metalpha, in a note. "This is an official statement of a bull run, and the price could see more upticks in the coming weeks.”

Last week, Powell said that interest rates are now well into restrictive territory, bolstering the narrative that the tightening cycle has peaked and adding to downward pressure on Treasury yields.

“Crypto, on the other hand, has been moving nicely higher, along with Gold, on the back of lower yields,” crypto data provider Amberdata said in a newsletter Sunday.

“Bitcoin has been eager to jump higher, even without the Spot ETF catalysts headline hitting the wires, the market is looking to get long,” Amberdata added.

Traders have loaded up on topside option plays in recent weeks, betting on Bitcoin’s eventual rise to $45,000 by the end of March 2024.

The week ahead will bring U.S. ISM services PMI data and non-farm payrolls for December. A strong NFP figure might result in the unwinding of Fed rate cut bets for 2024, slowing BTC’s ascent.

December 05, 2023