Bitcoin briefly rose above 42,000 and rose by 150% in a year, but technical indicators have shown signs of overbuying
Finance Associated Press, December 4 (Editor Zhao Hao) Driven by the two major factors of "the Federal Reserve may cut interest rates earlier" and "Bitcoin ETF will be approved in the United States", Bitcoin further exceeded $42,000 in the day after overcoming the $40,000 mark, an increase of more than 150% during the year.
According to Bitstamp's quote, at around 18:50 Beijing time, Bitcoin hit the $42,000 mark, reaching a maximum of $42,162 per coin, continuing to hit a new high since April 2022, and the total market value once reached $820 billion. It has now fallen back to around $41,740, with a total market capitalization of around $816.4 billion.
Recently, investors have become increasingly convinced that the Fed will not only not raise interest rates further, but will even cut them "earlier" next year as inflation cools. CME Group's FedWatch tool shows that the market has almost completely priced in the bank's expectation of a rate cut by June 2024, with the prevailing view also expecting the first rate cut to most likely occur in March next year.
This prediction not only led to the rebound of cryptocurrencies such as Bitcoin, but also a number of assets such as U.S. stocks, U.S. bonds, and precious metals have rebounded significantly, among which spot gold hit a record high during the day, rising nearly 13% during the year, and the S&P 500 index, the benchmark of U.S. stocks, has risen by more than 20%.
But these gains are slightly less than Bitcoin's 150%, because there is another key driver for cryptocurrencies - the US Securities and Exchange Commission (SEC) is likely to approve the listing of Bitcoin spot exchange funds (ETFs) in the United States, and some analysts expect the regulator to make a decision by January 10.
Previously, the SEC had been cautious about approving the transaction due to concerns about manipulation and fraud in the Bitcoin transaction, and had repeatedly denied the application. But experts predict a different outcome this time, as the regulatory tone appears to be shifting.
According to US media reports, the SEC said in a memo last Thursday (November 30) that officials of the agency met with representatives of Grayscale, BlackRock and Nasdaq to discuss the possibility of converting Grayscale Bitcoin Trust into an ETF.
Antoni Trenchev, co-founder of virtual currency lender Nexo, said that $48,000 and $52,000 look set to be Bitcoin's next key points. He added that the speed of the move towards $50,000 depends on when the spot bitcoin ETF is approved.
However, some technical indicators suggest that the rally in virtual currencies may have been excessive. For example, Bitcoin's weekly RSI (Relative Strength Indicator) has closed above 75 for the past two weeks. Generally speaking, more than 70 is considered an overbought signal, indicating that the market is overbought and investors can consider selling.
(Finance Associated Press Zhao Hao)