Bitcoin has surpassed $42,000, marking a recovery in the crypto market to pre-Terra levels.

Bitcoin Surpasses $42K, Ether Hits $2,200 in Crypto Market Rebound

Bitcoin (BTC) has surged above $42,000 for the first time since April 2022, reclaiming levels unseen since the Terra market crash, with Ether (ETH) also surpassing $2,200.

After hovering around the $40,000 mark in recent days, Bitcoin breached the $42,000 threshold on Monday, reaching over $41,600 at the time of reporting—a notable 24-hour increase of around 6%. Ether followed suit, trading at approximately $2,240, reflecting a similar percentage gain.

The positive momentum extended to crypto-related stocks, with Coinbase (COIN) experiencing an almost 9% surge in pre-market trading, alongside Microstrategy (MSTR). Leading crypto miners, such as Marathon Digital (MARA) and Riot (RIOT), witnessed gains exceeding 10%. Meanwhile, other top 10 cryptocurrencies posted more modest increases, with BNB coin (BNB), linked to the Binance exchange, showing little change.

Bitcoin’s price had dipped below $40,000 in April 2022 but has since rallied, driven partly by accommodative comments from U.S. central bankers and optimism regarding the potential approval of a spot bitcoin exchange-traded fund (ETF) in the United States.

Ether had not breached the $2,200 mark since May 2022, making the recent move a notable milestone, though it had approached this level on a few occasions.

Recent data indicated a significant withdrawal of 37,000 BTC by Bitcoin holders between November 17 and December 1, signaling a trend of users opting for direct custody of their coins.

The rise in Bitcoin’s value coincides with gold reaching a record high of over $2,100 per ounce during early Asian trading hours, responding to dovish comments from Federal Reserve Chairman Jerome Powell. Market sentiment is leaning toward an expected rate cut in the coming year, contributing to increased investor bullishness on Bitcoin ETF applications from major asset management players. Lucy Hu, Senior Analyst at Metalpha, highlighted this as an official statement of a bullish trend, suggesting the potential for further upticks in the coming weeks.

Federal Reserve Chairman Powell’s recent comments, indicating that interest rates are now in restrictive territory, align with the narrative that the tightening cycle has peaked, exerting downward pressure on Treasury yields. In contrast, crypto and gold have been gaining momentum amid lower yields, with analysts expressing optimism about Bitcoin’s trajectory.

Despite ongoing speculation about a potential Spot ETF catalyst, Bitcoin has shown eagerness to ascend, and traders have been actively engaging in topside option plays, anticipating a rise to $45,000 by the end of March 2024.

Looking ahead, the crypto market’s performance may be influenced by upcoming U.S. economic data, including ISM services PMI and non-farm payrolls for December. A strong NFP figure could lead to a reevaluation of Fed rate cut expectations for 2024, potentially slowing down Bitcoin’s ascent.