The cryptocurrency market is experiencing a notable resurgence, with Bitcoin and Ethereum reaching milestones at $41,000 and $2,200, respectively. This surge has propelled the total crypto market cap to a 2023 high of $1.54 trillion. Experts attribute this renewed confidence in the crypto market to two key factors: expectations of the US Federal Reserve cutting interest rates in 2024 and the potential approval of a Bitcoin Exchange-Traded Fund (ETF).

Rahul Pagidipati, CEO of ZebPay, highlights the significance of this surge, stating, “This surge represents a year-to-date peak for Bitcoin, showcasing an impressive 140% increase since the beginning of the year.” He emphasizes that the positive trend is linked to growing expectations of the SEC approving a spot Bitcoin ETF in January.

On a macro level, the anticipation of interest rate cuts by the Federal Reserve has driven up commodity prices, including historic highs for gold. Bitcoin, rebounding by nearly $15,000 in the past month, has been part of this upward trend. With the possibility of a US economic recession, fund managers are predicting an 80% consensus for a trend of interest rate reduction in 2024, reaching the highest consensus level recorded.

The optimism around Bitcoin ETF approval is expected to continue, creating positive sentiments globally. Shivam Thakral, CEO of BuyUcoin, notes, “The growing optimism around Bitcoin ETF approval will continue to create waves of positive sentiments within the global digital asset community, and we can expect this momentum to sustain in the coming weeks.”

The recent surge in Bitcoin comes after a significant drop in value in 2021, with trading volumes for crypto exchanges in India plummeting more than 90% since February 1, 2022. Factors contributing to this decline included the failure of prominent crypto exchanges like FTX and the end of an era of ultralow interest rates. In India, additional regulations were imposed, including a 30% tax on crypto gains and a 1% tax deducted at source (TDS) on all ‘sell’ transactions as of February 1, 2022.

Ryan Lee, Chief Analyst of Bitget Research, suggests that Bitcoin’s rise above $40,000 happened without encountering significant resistance, leading to the liquidation of short positions on Bitcoin contracts worth $54 million within 24 hours. Lee anticipates an overall accelerated upward revision in the market, citing the surge in the new asset category within the Bitcoin ecosystem, ORDI, over the weekend as an indicator of strong speculative sentiment.

While Standard Chartered Bank predicts Bitcoin reaching $120,000 by the end of 2024, skepticism persists in the broader financial landscape, with figures like Warren Buffett remaining cautious about the asset class. Buffett famously stated that he wouldn’t accept all the Bitcoin in the world for $25, highlighting lingering doubts about the cryptocurrency’s intrinsic value.

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