Bitcoin, the world’s largest cryptocurrency by market capitalization, surged above $40,000 on Wednesday, reaching its highest level since September. The rally was fueled by dovish comments from a Federal Reserve official and growing expectations of a Bitcoin exchange-traded fund (ETF) approval in the U.S.
One of the catalysts for Bitcoin’s rise was the speech by Federal Reserve Governor Christopher Waller at an event in Washington, D.C. on Tuesday. Waller said that the current monetary policy stance was appropriate and that he saw no need to raise interest rates anytime soon, even if inflation remained elevated.
Waller argued that the recent slowdown in economic growth and the uncertainty caused by the new Covid-19 variant, Omicron, warranted a cautious approach. He also said that he expected inflation to moderate in the next year as supply chain disruptions eased and demand pressures subsided.
Waller’s comments contrasted with those of some of his colleagues, such as Michelle Bowman and Richard Clarida, who have signaled that the Fed may need to hike rates sooner than expected to contain inflation. Waller’s dovish tone boosted the market sentiment and lowered the expectations of a hawkish Fed.
Bitcoin ETF Hype
Another factor that boosted Bitcoin’s price was the growing anticipation of a Bitcoin ETF approval in the U.S. A Bitcoin ETF is a financial product that tracks the price of Bitcoin and allows investors to buy and sell it on a regulated exchange, without having to deal with the technical and security issues of holding the actual cryptocurrency.
A Bitcoin ETF would increase the accessibility and liquidity of Bitcoin and attract more institutional and retail investors to the crypto space. It would also enhance the legitimacy and credibility of Bitcoin as an asset class and a store of value.
Several Bitcoin ETF proposals have been submitted to the U.S. Securities and Exchange Commission (SEC) over the years, but none have been approved so far. The SEC has cited concerns over market manipulation, fraud, custody, and investor protection as reasons for rejecting or delaying the applications.
However, some analysts and industry experts believe that the SEC may finally approve a Bitcoin ETF in the near future, as the crypto market has matured and the regulatory environment has improved. The SEC has already approved several Bitcoin futures ETFs, which are based on contracts that bet on the future price of Bitcoin, rather than the spot price.
Some of the Bitcoin ETF proposals that are currently under review by the SEC are:
- The VanEck Bitcoin Trust, which was filed in March and has a deadline of December 11.
- The Valkyrie Bitcoin Trust, which was filed in June and has a deadline of January 10, 2024.
- The WisdomTree Bitcoin Trust, which was filed in June and has a deadline of January 26, 2024.
- The Kryptoin Bitcoin Trust, which was filed in July and has a deadline of February 26, 2024.
The market is hopeful that at least one of these proposals will get the green light from the SEC and pave the way for the first Bitcoin spot ETF in the U.S.
Bitcoin Price Outlook
Bitcoin’s price has been on a roller coaster ride in the past few months, reaching an all-time high of over $67,000 in October, before plunging to below $30,000 in November. The volatility has been driven by a combination of factors, such as regulatory developments, macroeconomic events, technical indicators, and market sentiment.
However, despite the fluctuations, many analysts and investors remain bullish on Bitcoin’s long-term prospects, citing its limited supply, growing adoption, innovation, and resilience. Some of the bullish predictions for Bitcoin’s price in the future are:
- Michael Saylor, the CEO of MicroStrategy, a business intelligence firm that holds over 100,000 Bitcoins, said that he expects Bitcoin to reach $1 million in the next decade.
- Cathie Wood, the founder and CEO of ARK Invest, a leading investment firm that focuses on disruptive technologies, said that she sees Bitcoin hitting $500,000 in the next five years.
- PlanB, a pseudonymous analyst who created the stock-to-flow model, a popular valuation method for Bitcoin, said that he projects Bitcoin to reach $100,000 by the end of 2023 and $1 million by 2025.
Of course, these predictions are based on various assumptions and scenarios, and there is no guarantee that they will materialize. Bitcoin’s price is subject to many risks and uncertainties, and investors should be prepared for high volatility and potential losses.
