Bitcoin’s ‘jet-fueled’ 16% six-day jump takes token past US$44,000

BANGKOK – Bitcoin’s longest winning run since May lifted the token past US$44,000, sparking questions about whether the breakout increasingly reflects a conviction that looser United States Federal Reserve monetary policy lies ahead.

The largest digital asset climbed for six days through Dec 5, adding roughly 16 per cent, and was consolidating the gains in early Asian trading on Dec 6. Its 2023 rebound from 2022’s crypto rout now stands at 165 per cent.

Bitcoin was little changed at US$43,851 as at 10.16am in Singapore, still some US$25,000 below its 2021 record of almost US$69,000.

Much of the latest rally is pegged to the prospect of the US allowing its first spot Bitcoin exchange-traded funds (ETFs), paving the way to a wider investor base.

BlackRock and Fidelity Investments are among those awaiting the outcome of their applications, with some analysts expecting a green light by January.

But ETF hype has shadowed Bitcoin since June, when asset managers began seeking approval to roll out the funds. That is leading some to ask if the token’s surge is now drawing more succour from wagers on Fed rate cuts in 2024.

“Surely the ETF story is well and truly priced?” said IG Australia market analyst Tony Sycamore.

The high volatility, “jet-fuelled” move up in Bitcoin is instead a reminder that crypto is “more responsive to a Fed pivot and policy than other asset classes”, he said.

For now Bitcoin momentum is overshadowing any concerns that the surge is at risk of becoming too stretched. Smaller virtual currencies such as Ether, Avalanche and meme-crowd favorite Dogecoin have also been advancing.

‘Kimchi premium’

The bullish overall mood is evident across a range of countries.

Bitcoin on South Korea’s Upbit and Bithumb exchanges was trading about 4 per cent above the prevailing global price on Dec 6, a return of the so-called “kimchi premium” that made headlines during the pandemic-era bull run in digital assets.

In Abu Dhabi, crypto mining hardware retailer Phoenix Group jumped 35 per cent on its debut on Dec 5.

The firm is the first crypto-related listing in the Middle East.

In El Salvador, Nayib Bukele said in a posting on X this week that the nation’s Bitcoin investments had turned profitable. He is running for re-election after stepping down as president last week.

Another prop for sentiment is the so-called Bitcoin halving due in 2024, which will cut in half the amount of tokens that Bitcoin miners receive as reward for their work.

The quadrennial event is part of the process of capping Bitcoin supply at 21 million tokens. The coin hit records after the last three halvings.

“Both micro and macro factors are currently lining up for Bitcoin,” said Mr Zach Pandl, managing director of research at crypto fund provider Grayscale Investments. BLOOMBERG

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