Bitcoin Bulls knocking on $37,000, Defying Challenges and Igniting Optimism in the Crypto Market
After an 18-month journey, Bitcoin has finally reclaimed pre-crash levels, rising 3.9% to $36,990, the highest since May 5, 2022, just before the TerraUSD stablecoin triggered a crypto market collapse. The recovery, occurring almost exactly a year after the FTX exchange's bankruptcy filing, signals a psychological shift for crypto traders, moving past the scars of the previous crash, according to Markus Thielen, head of research at Matrixport.
This year's recovery for Bitcoin, unlike previous cycles, unfolded in sporadic bursts amid periods of low volatility, overcoming challenges such as the Federal Reserve's most substantial monetary tightening in four decades and heightened industry regulations. Various narratives fueled the resurgence, including Bitcoin as an inflation hedge, a safe haven during the March US banking crisis, and potential approval for Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC).
Optimism surrounding SEC approval has driven Bitcoin up over 120% this year, with analysts from Bloomberg Intelligence suggesting a 90% chance of approval by January 10, even if it doesn't come this month. This outlook has propelled Bitcoin further than global stocks, which have risen a modest 10% in the same period.
Although Bitcoin is only halfway to its 2021 peak of nearly $69,000, supporters are already crafting new narratives about its resilience. The anticipation of ETF approval, coupled with speculation that the US Federal Reserve is pausing rate hikes and an upcoming Bitcoin halving in the next year, is sustaining the current rally.
The milestone also marks a divergence from the legacies of figures associated with previous failures in the crypto space. Sam Bankman-Fried, once hailed as a crypto savior, recently faced a guilty verdict in one of the largest US financial fraud cases. Meanwhile, Do Kwon, the creator of the ill-fated TerraUSD, is wanted on fraud charges by US and South Korean authorities after spending time in a Montenegrin jail.