Bitcoin has experienced a significant breakout, reaching a yearly high of approximately $39,900, sparking anticipation among market observers that it may soon surpass the $40,000 threshold. The surge in price comes in the aftermath of a speech by Jerome Powell, Chair of the United States Federal Reserve, hinting at the continuation of restrictive interest rates until inflation aligns with the 2% target.
The recent price increase, propelled by market optimism and speculation on the Fed’s future course, has reignited discussions about the potential for Bitcoin to breach $40,000 and even make strides toward the $50,000 mark.
Markus Thielen of Matrixport expressed a bullish outlook, assigning a 90% chance of Bitcoin reaching $45,000. He attributes this optimism to positive market sentiment and the anticipated approval of a spot exchange-traded fund (ETF). Thielen notes historical trends, pointing out that Bitcoin tends to rally by around +12% in December, aligning with the early 2023 year-end target.
Traditional financial institutions, including BlackRock, are actively seeking approval for a spot Bitcoin ETF from the US Securities and Exchange Commission (SEC). Grayscale, anticipating approval, has appointed John Hoffman, formerly of Invesco, to lead its Bitcoin ETF efforts. The narrowing discount on Grayscale’s Bitcoin Trust to its net asset value further fuels expectations of an imminent Bitcoin ETF approval.
In addition to market optimism, on-chain data signals a bullish trend. Glassnode reports a significant withdrawal of over 37,000 BTC from exchanges since November 17, a move often seen as a positive indicator suggesting a shift toward long-term holding and reduced selling pressure.
Furthermore, Bitcoin holders are currently at their most profitable levels since December 2021, with over 80% of Bitcoin addresses now holding at a profit, according to data from IntoTheBlock. This statistic underscores the positive momentum in the market, with Bitcoin continuing to see gains beyond the data collection period, potentially increasing the percentage of profitable addresses.
As Bitcoin approaches the $40,000 mark, the confluence of on-chain signals, institutional interest, and positive market sentiment sets the stage for continued excitement and potential further gains in the cryptocurrency market.