Expectation for an Etf investing in tokens: Bitcoin rises to 21-month highs

Bitcoin surpassed $45,000 for the first time in almost two years as anticipation grows among traders for the approval of an exchange-traded fund to invest directly in the largest token (a fraction - token - of an issued cryptocurrency). The cryptocurrency jumped 4.3 per cent to its highest level since 6 April 2022 and was trading at $45,355 at 12:25pm Singapore time. Other tokens also rose: Ether, the second largest, rose 2.6 per cent.

The Bitcoin has risen by more than 20 per cent since the beginning of December, as the 10 January deadline approaches for the US Securities and Exchange Commission (SEC) to approve a Bitcoin ETF spot, as requested by some major asset managers starting with Blackrock. "The pressing demand from the world's leading asset managers highlights the growing presence of capital seeking simple investment vehicles in this asset class," is the comment of the fintech CheckSig specialising in crypto products, according to which Bitcoin's halving (i.e. the halving of the reward to those who mine bitcoin that occurs every four years), scheduled for May 2024, also fuels positive expectations, reinforcing the consolidated bullish trend associated with this phenomenon.

Some traders in the US and Europe fear they will miss out on the opportunity in view of the impending approval and investors have started "buying on 1 January, first thing on New Year's morning," explains Hayden Hughes, co-founder of the social-trading platform Alpha Impact.

Options traders are betting on Bitcoin reaching $50,000, taking advantage of ETF optimism. A major course correction is unlikely to occur, given the broader bullish sentiment and impending halving, explains Cici Lu McCalman, founder of blockchain consultancy Venn Link Partners, referring to the process that halves the amount of Bitcoin 'miners' receive per block reward. "I think traders need nerves of steel to go short on BTC," McCalman pointed out.

Bitcoin halving, i.e. the halving of the reward to those who mine bitcoin - also known as halvening - occurs every four years or so, It is a condition set out in the cryptocurrency protocol that requires the bitcoin block reward to be halved every 210,000 blocks. The cryptocurrency has hit records after each of the last three halving. Bitcoin's nearly 160% rebound last year partially repaired some of the damage caused by the precipitous crash of 2022, which reverberated through the cryptocurrency sector. The token outperformed global equities and gold over the period, but remains below the 2021 pandemic-era record of nearly $69,000.