Bitcoin, the world’s biggest and most popular cryptocurrency, surged above $45,000 on Tuesday, marking its highest level since April 2022. The top cryptocurrency’s performance has been fuelled by optimism surrounding the potential approval of exchange-traded spot bitcoin funds.

Bitcoin reached a 21-month peak at $45,488, showing a 154 per cent gain in the previous year – its strongest performance since 2020. As of the latest update, it was trading at $45,344, reflecting a 2.6 per cent increase. However, it still lags behind its all-time high of $69,000, recorded in November 2021.

Ether, the cryptocurrency associated with the Ethereum blockchain network, also experienced positive movement, rising 1 per cent to reach $2,376 on Tuesday.

Bitcoin’s sudden surge

Investor attention has been focused on the possibility of the US Securities and Exchange Commission (SEC) approving a spot bitcoin exchange-traded fund (ETF).

The approval of such an ETF would open up the bitcoin market to a broader investor base. Despite multiple rejections in recent years, there is growing anticipation that the SEC might approve some of the 13 proposed spot bitcoin ETFs in early January.

The prevailing sentiment in the market is influenced not only by the potential ETF approval but also by the expectation of interest rate cuts by major central banks in the coming year.

These factors have contributed to a positive outlook for cryptocurrencies, helping dispel the negativity that gripped the crypto markets following the failures of FTX and other crypto businesses in 2022.

Jupiter Zheng, Partner of Liquid Funds at HashKey Capital, told news agency Reuters that the cryptocurrency market is likely to see positive momentum in 2024.

“The crypto market is set to experience notable growth this year, with key influencing factors being the influx of investment funds from spot ETFs, Bitcoin halving, and a more accommodative monetary policy both in the United States and worldwide,” he told the news agency.