Bitcoin crosses $40,000 mark. Why is crypto rising again?

Experts say this has been fuelled by expectations of the US Fed cutting interest rates in 2024 and the eventual approval of a Bitcoin ETF

Bitcoin and Ethereum breach the $41,000 and $2,200 marks

US Fed is expected to cut interest rates in 2024, potentially improving liquidity

Bitcoin ETF approval could drive up the price of the world's largest cryptocurrency

The crypto market is witnessing its best performance since May 2022, with Bitcoin and Ethereum breaching the $41,000 and $2,200 marks, respectively. The latest rally has taken the total crypto market cap to the $1.54 trillion, a 2023 high. Experts say the growing confidence in the crypto market has been fuelled by expectations of the US Federal Reserve cutting interest rates in 2024 and the eventual approval of a Bitcoin ETF, which could drive up the price of the world’s largest cryptocurrency.

“This surge represents a year-to-date peak for Bitcoin, showcasing an impressive 140% increase since the beginning of the year. More than just a numerical value on a chart, the surge in Bitcoin price reflects a broader shift in the sentiment around crypto. The current upward trend is largely attributed to mounting expectations of a potential approval by the SEC for a spot Bitcoin ETF in January,” said Rahul Pagidipati, CEO, ZebPay.

At the macro level, anticipation of interest rate cuts by the Federal Reserve has propelled commodity prices higher. Gold has hit historic highs, and Bitcoin has rebounded by nearly $15,000 over the past month. With the potential for a US economic recession, fund managers predict an 80% consensus level for a trend of interest rate reduction in 2024, marking the highest consensus level ever recorded. The crypto market has already factored in this positive news, explained Ryan Lee, Chief Analyst of Bitget Research.