On Monday, cryptocurrency-related stocks listed in the U.S. surged, extending their impressive November gains. This surge was fueled by Bitcoin hitting a fresh high for the year, surpassing $42,000.
Bitcoin, the largest cryptocurrency globally, saw a 4.0% climb, reaching $41,598.0, its highest point since April 2022. This surge was driven by optimism about potential U.S. interest rate cuts and expectations of the approval of U.S. stock market-traded bitcoin funds.
Analysts, like Ipek Ozkardeskaya from Swissquote Bank, highlighted the significance of a potential ETF approval, anticipating it to bolster investment interest due to better regulation and ease of investment.
The current market environment reflects a broader risk rally, with falling yields contributing to Bitcoin's gains. Additionally, positive sentiments for next year as it approaches a halving event are also propelling the cryptocurrency.
Halving is a process designed to slow Bitcoin's release, historically leading to price rallies. This anticipation for the event is contributing to the bullish outlook.
Stocks like Coinbase and Microstrategy surged, with Coinbase rising by 7.3% and Microstrategy, a significant Bitcoin investor, gaining 8.2% after purchasing $593 million worth of bitcoins last month.
Bitcoin mining companies like Riot Platforms, Marathon Digital, and CleanSpark experienced notable jumps of 9.7% to 12.0%, building upon their already substantial gains from November.
The ProShares Bitcoin Strategy ETF, tracking bitcoin futures, rose by 7.4%, poised to hit over a one-year high, while the ProShares Short Bitcoin Strategy ETF, enabling traders to bet on a decline in bitcoin futures, fell by 7.2%.
Earlier in the year, lukewarm investor sentiment prevailed in the cryptocurrency sector following notable collapses in 2022, resulting in outflows of over a trillion dollars from the sector.
Despite this, the recent rally propelled Bitcoin's value by over 150% in 2023, positioning it for its best annual performance since 2020.