Bitcoin surged to start 2024, topping $45,000 for the first time since April 2022 amid an uptick in geopolitical tensions in the Red Sea and growing optimism around a potential bitcoin exchange-traded fund approval.

The world's largest cryptocurrency hit an intraday high of $45,913.30 early Tuesday morning, according to Coin Metrics. That was its highest level since April 5, 2022, and the first time it has traded above the $45,000 mark since then. It was last higher by nearly 3%, trading at $44,952.89.

The increase showed bitcoin's role as a hedge against uncertainty, which investors became familiar with last year. Over the weekend, a Maersk vessel came under attack by four small boats crewed by Houthi militants, who are based in Yemen and backed by Iran.

Most of the six-month rally in bitcoin is tied to the potential ETF, but before that narrative came into play, bitcoin's biggest catalyst was the regional banking crisis in the U.S. That led to bitcoin's first big gain of the year, allowing the cryptocurrency to shine as an alternative to the legacy system in place and hedge against uncertainty.

The move also comes amid continued excitement among traders that the U.S. could approve the first bitcoin ETF. This would allow investors to buy a product that tracks the price of bitcoin without having to own the cryptocurrency directly, likely appealing to larger institutional investors.

On Friday, BlackRock and other potential issuers updated the registration forms for their proposed bitcoin ETFs, including names of authorized participants. Investors are reading that extra detail as evidence that a decision by the U.S. Securities and Exchange Commission is coming soon. Many industry experts expect the funds to be approved in January.

The continued price gains for bitcoin follow 2023's hot streak, when the price of the digital coin rose 157% and many expect the pop to continue.

Investors have high hopes for bitcoin in 2024. A decision on an ETF is widely expected to come sometime in January. Shortly after, in the spring, the Bitcoin halving is expected to take place, an event that historically has preceded steep price increases. Plus, Fed officials are anticipating at least three interest rate cuts this yearafter almost two years of hikes that have hurt the cryptocurrency.

Other cryptocurrencies also ticked higher Tuesday. Ether traded at around $2,367, up roughly 1%.

CNBC's Jesse Pound contributed to this report.

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Bitcoin tops $45,000 for the first time since April 2022 as crypto jumps to kick off new year - CNBC

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CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and provides viewers with a look at what's ahead with high-profile interviews, explainers, and unique stories from the ever-changing crypto industry. On today's show, Ari Redbord of TRM Labs takes a look back at last year's court hearings and trials against some of the biggest names in the industry. He also discusses what to expect in 2024.

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Bitcoin bounces back above $44,000 amid volatile start to 2024 - CNBC

Bitcoin (BTC) focused on $44,000 into its first weekly close of 2024 as multiple new volatility catalysts lined up.

Data from Cointelegraph Markets Pro and TradingView showed narrowing volatility in BTC price performance over the weekend.

Markets remained nervous as to how BTC/USD might react to the approval or denial of the United States first spot Bitcoin exchange-traded fund (ETF) a decision due by Jan. 10.

As Cointelegraph reported, the seminal event is widely predicted to deal a temporary blow to bulls in the form of a BTC price retracement in a sell the news event. Others see a chance for knee-jerk upside potentially challenging key psychological levels.

Regardless of which direction the move might take, indicators nonetheless pointed to a breakout from the narrow intraday range.

Among them was the Bollinger Bands volatility indicator, now narrowing on daily timeframes in a classic precursor to range expansion.

Bollinger Bands tightening even more heading into ETF week, trader and commentator Matthew Hyland told subscribers on X (formerly Twitter) overnight.

Fellow trader Daan Crypto Trades added that the so-called spot premium was once again active on Bitcoin markets, with derivatives traders seemingly wary of going long or short after last weeks snap liquidations.

The longer we range around this price area the more positions will build up with stop losses/liquidations sitting above and below the price, he continued, alongside a heatmap of leveraged BTC/USDT liquidity on the largest global exchange, Binance.

While attention remained focused on the ETF, macroeconomic hurdles were waiting in the wings.

Related:March banking crisis rerun risks 40% Bitcoin price crash Arthur Hayes

These were in the form of U.S. inflation data, with the December prints of both the Consumer Price Index and Producer Price Index due in the coming days.

Traditionally a source of short-term volatility for crypto and risk assets in their own right, the data releases would ostensibly need to show inflation continuing to subside.

As Cointelegraph reported, the key result of this the Federal Reserve pivoting on interest rate policy is not currently expected to occur at its next dedicated meeting at the end of the month.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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Bitcoin traders see breakout as bulls cling to $44K in ETF countdown - Cointelegraph

The price of one whole Bitcoin (BTC) can deter potential investors who are hesitant to buy only a fraction of the cryptocurrency due to unit bias psychology, which favors owning complete units, according to VanEck adviser Gabor Gurbacs. He suggests that Bitcoin exchange-traded funds (ETF) are a solution to this challenge.

In a series of posts on X (formerly Twitter), Gurbacs stated that many people are still unaware they can own a part of a Bitcoin and suggested there are even more individuals who prefer to own only complete assets:

Furthermore, he reiterates that it seems more appealing to investors to own a whole asset than a fraction.

Owning a full share feels better than owning 0.001 Bitcoin. Seems like a small thing but its a big thing, he stated.

Although Gurbacs recognizes that this debate is not new, he argues that biases represent one of the most valuable tools for understanding markets.

Simplistic but unit bias psychology matters a lot. I think about this a lot, he further added.

Related: BlackRock to slash 3% of workforce ahead of Bitcoin ETF deadline: Report

Meanwhile, the crypto industry is filled with high expectations that the United States Securities and Exchange Commission (SEC) will greenlight a spot Bitcoin ETF in the upcoming week.

However, the broader financial services industry is more skeptical of the chance it will happen.

In a recent survey by Bitwisewith responses from 437 financial advisers, just 39% of U.S. financial advisers anticipate the approval of a Bitcoin ETF in 2024.

Cointelegraph recently reported that the final steps for a spot Bitcoin ETF debut on Wall Street are in progress, with final revisions from asset managers expected by the morning of Jan. 8.

The revisions must be submitted through S-1 filings before the start of business, and applicants are expected to reveal the remaining fees and tickers.

BlackRock has not yet disclosed the fees associated with its ETF.

Magazine: 10 best long reads about crypto in 2023

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Bitcoin ETFs will solve unit bias psychology, says VanEck adviser - Cointelegraph

The first Bitcoin exchange-traded funds could launch as soon as next week, but the fee wars between the likes of Fidelity Investments and Invesco have already begun.

Those companies for the first time are detailing in federal filings their planned fees for some of the most anticipated funds in history. The filings show that while the launch of ETFs could end up bolstering the coins, they arent likely to be a bonanza for the companies offering them, at least in the near term.

Fidelity, for example, in a filing on Friday said its Wise Origin Bitcoin Fund will charge merely 0.39% annually in expense fees. Invesco and crypto firm Galaxy, which seek to launch the Invesco Galaxy Bitcoin ETF, said their fund plans to charge 0.59%, though the fee will be waived for six months on the first $5 billion in assets. Other would-be contenders, including Bitwise Asset Management and BlackRock havent yet said in their filings what their funds will charge, and the proposed fees could change before launch in any case.

A BlackRock spokeswoman and a Bitwise spokeswoman each declined to comment.

The Securities and Exchange Commission is expected to soon give the green light to launch funds that hold spot Bitcoin. Funds that hold Bitcoin futures, like ProShares Bitcoin Strategy, have existed since 2021. The agency for years denied such spot Bitcoin applications, but an appellate court last year said the SECs rejection of one such bid was arbitrary and capricious.

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Though the SEC could come up with another reason for rejecting the funds, agency staff have asked potential sponsors for filing updates and other information that would seem to indicate approvals are imminent.

The SEC declined to comment.

Some analysts estimate that the launch of the funds could bring tens of billions of dollars into Bitcoin, as some financial advisors get an easy way to access the cryptocurrency for the first time. On Tuesday, Bitcoins price broke through $45,000 powered in part by anticipation of the ETFs.

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But even if that ends up being the case, it isnt looking like the funds will be an immediate windfall for their sponsors.

Right now, the largest Bitcoin fund is the Grayscale Bitcoin Trust, operated by Grayscale Investments with $26 billion under management. The trust trades like a closed-end fund with price that can deviate from the value of the coins it holds. While the discount had been as steep as 50% in 2022, on Friday it was merely 8%.

The Grayscale funds annual fee right now is 2% of its assets, or about $520 million at current prices.

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Grayscale hasnt said what the fund will charge if it converts. A spokeswoman said only that the company is committed to lowering the fee upon approval.

Out of the starting gate, the Grayscales fund will likely have better liquidity than other contenders, meaning tighter bid/ask spreads for rapid traders who care less about annual expense ratios.

Still, given Fidelity and Invescos disclosures, it is already safe to conclude that the Bitcoin funds wont be a cash cow. At Fidelitys expense ratio, for example, Grayscales $26 billion fund would only yield $101 million in fees, before taking into account the expenses of running the fund.

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Even if the assets under management of the total Bitcoin ETF space were to be double the size of the Grayscale fund, a 0.39% fee would represent only about 1% of the $17.8 billion in revenues that analysts estimate BlackRock earned in 2023. And thats at the starting gate, before fund companies start undercutting one another.

The potential saving grace for fund companies and Bitcoin investors is that some analysts predict the ETF launches could drive prices much higher.

Analysts for Bernstein Research in a note on Tuesday said the coins market cap could more than triple to $3 trillion by mid-2025.

Our only message from the outlook report is BUY THE DIP. And every dip the market offers in 2024, wrote the analysts, led by Gautam Chhugani.

Write to Joe Light at joe.light@barrons.com

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Bitcoin ETFs Are Almost Here. The Fee War Is Already Heating Up. - Barron's

Crypto-related stocks such as Coinbase Global have gained on the potential approval of exchange-traded funds tied to the spot price of Bitcoin but Mizuho Securities Dan Dolev is warning the company might not receive the hoped-for benefits.

Coinbase shares were down 1% in early trading at $150.94, reversing earlier gains. The cryptocurrency exchanges stock has tumbled from highs of more than $180 a share in recent days but it has still more than quadrupled over the past 12 months.That has prompted caution that the stock might be getting ahead of itself, including from Barrons.

Mizuhos Dolev, a longtime skeptic on the stock, sounded another warning on Thursday. He warned that while the rally has been based on excitement over the expected approval of spot Bitcoin ETFs, the reality might disappoint.

With the hype around Bitcoin ETFs likely to reach a climax in the coming weeks, COIN bulls could experience a rough awakening when they realize how minimal the revenue impact is, wrote Dolev.

Dolev reiterated an Underperform rating on Coinbase. His target for the stock price is $54, a bit more than one-third of its current level.

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The analysts calculations are based on the assumption that around $81 billion of new investment might flow into Bitcoin ETFs if they are approved. That would represent close to 10% of the current market capitalization of the digital currency.

Dolev estimates that Coinbase might end up serving as custodian of around half of that money.That would imply roughly $25 million-$30 million of custody-fee revenue earned by Coinbase on the Bitcoin ETFs, according to the Mizuho analyst.

A bigger boost could come from increased trading of Bitcoin on exchanges such as Coinbase. Assuming annual trading volume increased by around $83 billion, and applying Coinbases historical market share and fees, that implies around $200 million-$210 million of additional revenue, according to Dolev.

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This represents just mid-to-high single-digit percentage upside vs. current 2024 consensus, Dolev wrote. The potential upside to COIN revenue from Bitcoin ETF [approval] may be far less than what the stock indicates.

Coinbase didnt immediately respond to a request for comment from Barrons on Thursday.

It is worth noting that the calculations are sensitive to the assumptions made about what the approval of Bitcoin ETFs might mean for the sector. Analysts at Bernstein Research have estimated that the approval might help bring an additional $600 billion in funds into the crypto sector, considerably more than Dolevs estimate.

However, Dolev is hardly alone in his skepticism toward Coinbase stock. The average target for the stock price among Wall Street analysts tracked by FactSet

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Coinbase Stock Wobbles as Analyst Warns Gains From Bitcoin ETFs Might Disappoint - Barron's

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This is the Most Interested US State in Spot Bitcoin ETF - CryptoPotato

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Y'all set to spend another week muttering about imminent spot bitcoin ETF approval? - ForexLive

The year 2023 will be remembered as turbulent for cryptocurrencies, with numerous important developments that ultimately helped to clean up the space to potentially make it more attractive to mainstream investors. Notably there was the conviction of FTX CEO Sam Bankman-Fried for fraud.

Top exchange Binance also reached a US$4 billion settlement (3.1 billion) with the US treasury department over money-laundering charges, which saw CEO Changpeng CZ Zhao agreeing to step down and pay a US$50 million fine.

Meanwhile, regulators continued cracking down on other operators, but potentially lost one of their key cases against the industry after a US court ruled that the XRP token, one of the top ten cryptocurrencies, was not a security (meaning a tradeable financial asset like shares or bonds).

This means its creator, Ripple, did not break the law by selling it on exchanges. Viewed as a test case for the majority of cryptocurrencies, the US Securities Exchange Commission (SEC) is currently appealing.

While all this was happening, the bitcoin price rose away from the lows of late 2022. It started the year at US$16,000 and ended comfortably above the US$40,000 threshold.

So what does 2024 look like for this sector and what key events are on the horizon?

The SEC may finally be about to greenlight a type of investment vehicle known as an exchange traded fund (ETF) for the for the general or spot bitcoin market. ETFs already exist for everything from oil to the FTSE 100 to even regions and countries. They track the underlying asset, creating an easy way for people to invest without having to buy the asset directly.

Until now, the only ETFs permitted for crypto in the US have been for the futures markets. These niche markets are concerned with where investors think crypto prices are heading in future.

Bitcoin price 2021-24

A spot bitcoin ETF would likely encourage mainstream investors to buy exposure to this market, while potentially attracting banks to actively participate too. Bitcoin could be offered by financial advisors and there would no longer be a need for investors to hold the asset itself or face difficulties like crypto exchanges, coin storage and so on.

There are various reasons why many commentators think the SEC may now end its opposition to such an ETF. For one thing, the list of applicants includes Blackrock, the biggest investment house in the world, along with various other major players.

Also, digital asset group Grayscale won an important case against the SEC in 2023, which had been blocking its attempt to convert its US$17 billion bitcoin futures ETF, GBTC, into a spot version. This has forced the SEC to reconsider Grayscales application too.

Further, Hong Kongs regulatory authority has announced it is open to spot bitcoin ETF applications and has laid down guidelines permitting several varieties. As well as the basic model that we may soon see in the US, where investors would buy into bitcoin ETFs with dollars, Hong Kong is open to a second variety known as in-kind.

This would make it possible to convert shares in a bitcoin ETF into bitcoin and vice versa, allowing more flexibility and potentially attracting more institutional investors into the space.

Jerome Powell, chair of US central bank the Federal Reserve, has indicated that interest rates may have peaked, and that the Fed is likely to cut them during 2024. Similarly in the UK, leading mortgage lender Halifax has cut its lending rate in expectation of a Bank of England rate cut.

If interest rates are cut or even stabilise in 2024, it could make bitcoin (and other digital assets) more attractive to investors, since its limited supply makes it a hedge against traditional currencies losing value over time.

More generally, rate cuts prompt investors to look for higher investment returns, and cryptocurrencies have delivered here too.

Asset class returns since 2011

In addition, the US and other economies may enter a recession in the later half of 2024 due to the lagged effects of the interest rate hikes.

Equally, we saw a number of bank failures in 2023, predominantly in the US. In the event of a recession or more bank problems, governments may be forced to provide stimulus packages and print more money. This would further devalue currencies and make bitcoin still more attractive.

A big event for bitcoin in 2024 is the so-called halving. Bitcoin runs on an online ledger known as a blockchain, in which entries are validated by miners using arrays of computers to solve complex mathematical puzzles. Miners are paid in bitcoin for completing a set of transactions known as a block, and the protocol stipulates that their reward per block halves every 210,000 blocks (roughly every four years).

The reward began at 50 bitcoin in 2009 and is expected to fall from 6.25 bitcoin to 3.125 bitcoin around the middle of April 2024.

This decrease entails fewer bitcoin sold on the market, which tightens supply and may squeeze out the least efficient miners, significantly reducing the computer power used by the network. The three previous halvings have prompted dramatic bull runs, while also driving up the prices of digital assets more generally as investors take more risks in the space.

Halving effects

The bitcoin network saw a number of technological advancements in 2023. This has included enabling a new and a unique form of NFTs (non-fungible tokens) known as ordinals, and also a new standard called BRC-20 that makes it possible to create new cryptocurrencies on the network. Until now, NFTs and new cryptocurrencies have mostly been issued on other blockchains such as ethereum.

We are also seeing growing adoption of the Lightning network, a layer above the bitcoin blockchain that enables much faster transactions. All these changes are resulting in increased demand for bitcoin, which in turn may lead to higher prices.

In sum, theres a strong case for being bullish about bitcoins price in the year ahead. Commentators predictions range from US$60,000 to US$500,000 by year end. Our own belief is that though the road may be bumpy, 2024 could well see increased adoption of cryptocurrencies, which will drive prices beyond the current US$40,000 mark.

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Bitcoin: four reasons why the price should surge in 2024 - The Conversation

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Crypto Stocks Rally On Report Bitcoin ETF Regulatory Approvals Could Arrive Sooner Than Expected - Investor's Business Daily