Bitcoin briefly passes $44,000 as 'jet-fuelled' jump continues

The largest digital token has rebounded more than 165% since last year’s crypto rout

Bitcoin's rally is largely being driven by the prospect of the US allowing its first spot Bitcoin exchange-traded funds. Reuters

Bitcoin’s longest winning run since May lifted the token past $44,000 in overnight trading, sparking questions about whether the breakout reflects a conviction that looser US Federal Reserve monetary policy lies ahead.

The largest digital asset climbed for six days through to Tuesday, adding roughly 16 per cent, and was consolidating the gains in early Asian trading on Wednesday. Its rebound from last year’s crypto rout now stands at 165 per cent.

As of 8am UAE time, Bitcoin was trading at $43,760.11, still $25,000 below its 2021 record of almost $69,000.

Much of the rally is pegged to the prospect of the US allowing its first spot Bitcoin exchange-traded funds, paving the way to a wider investor base.

BlackRock and Fidelity Investments are among those awaiting the outcome of their applications, with some analysts expecting a green light by January.

But ETF hype has shadowed Bitcoin since June, when asset managers began seeking approval to roll out the funds. That is leading some to ask if the token’s surge is now drawing more succour from wagers on US Federal Reserve rate cuts next year.

“Surely, the ETF story is well and truly priced?” said Tony Sycamore, a market analyst at IG Australia.

The high volatility, “jet-fuelled” move up in Bitcoin is instead a reminder that crypto is “more responsive to a Fed pivot and policy than other asset classes”, he said.

For now, Bitcoin's momentum is overshadowing any concerns that the surge is at risk of becoming too stretched. Smaller virtual currencies such as Ether, Avalanche and meme-crowd favourite Dogecoin have also been advancing.

The bullish overall mood is evident across a range of countries. Bitcoin on South Korea’s Upbit and Bithumb exchanges was trading about 4 per cent above the prevailing global price on Wednesday, a return of the so-called “kimchi premium” that made headlines during the pandemic-era bull run in digital assets.

In Abu Dhabi, crypto mining hardware retailer Phoenix Group jumped 35 per cent on its debut on Tuesday. The firm is the first crypto-related listing in the Middle East.

In El Salvador, Nayib Bukele this week said in a posting on X, formerly Twitter, that the nation’s Bitcoin investments had turned profitable. He’s running for re-election after stepping down as president last week.

Another prop for sentiment is the so-called Bitcoin halving due next year, which will cut in half the amount of tokens that Bitcoin miners receive as reward for their work. The quadrennial event is part of the process of capping Bitcoin supply at 21 million tokens. The coin hit records after the last three halvings.

“Both micro and macro factors are currently lining up for Bitcoin,” said Zach Pandl, managing director of research at crypto fund provider Grayscale Investments.