Bitcoin climbs above $42K for the first time in 18 months as crypto rally heats up

Bitcoin breached $42,000 on Monday morning — a level the volatile cryptocurrency hasn’t seen since April 2022.

Bitcoin peaked at $42,108.59 as of 6:00 a.m. EST on Monday, attributed to traders’ expectations that US regulators will soon approve an exchange-traded bitcoin fund — and bets that the Federal Reserve is done hiking interest rates.

Fed Chair Jerome Powell incited fresh optimism that central bankers’ aggressive tightening regime is over on Friday. “We are getting what we wanted to get” out of the economy, he said during an event at Spelman College in Atlanta.

Though he said that the “full effects” of the current interest rate have likely not yet been felt, he noted that a key measure of inflation averaged 2.5% over the six months ending in October, near the Fed’s 2% target.

Powell said it was clear that monetary policy was slowing the economy as expected with a benchmark overnight interest rate “well into restrictive territory.”

The benchmark federal funds rate is currently at a 2-year high, between 5.25% and 5.5%.

Economists have been divided on what Fed officials’ next move will be following their next meeting on Dec. 12 and Dec. 13 — and whether it means the US economy is in for a soft landing, which will see it skirting a recession, or a hard landing.

Powell reiterated, as his colleagues have in recent weeks, that it was still too early to declare the Fed’s inflation fight finished.

Bitcoin traders, however, evidently foresee a soft landing.

At the time of writing, the coin sat at $41,800, an impressive 152.83% year-to-date increase.

Investors are also hoping the Securities and Exchange Commission is set to approve bitcoin exchange-traded funds

Over the summer, an appeals court in Washington, DC, ruled that the SEC should have approved an application from Grayscale Investments to create a bitcoin-specific ETF — a landmark victory for the asset manager that could pave the way for the first product of its kind.

A panel of judges in the District of Columbia Court of Appeals in Washington said in August that the securities regulator’s denial of Grayscale’s proposal was arbitrary and capricious because the SEC failed to explain its different treatment between bitcoin futures ETFs and spot bitcoin ETFs.

The ruling came more than a year after Grayscale, a crypto asset manager, submitted an application for a spot bitcoin ETF.

It remains to be seen how the ruling might impact proposals submitted this past June by BlackRock, the world’s largest asset manager, and several other firms to offer spot bitcoin ETFs.

The bitcoin rally shows just how resilient cryptocurrency is.

Since 2022, the coin has weathered the storm triggered by Sam Bankman-Fried, who was convicted last month of stealing $10 billion from users of his crypto exchange FTX and lying to lenders and investors.

The conviction marked the end of Bankman-Fried’s fall from grace.

He faces up to 110 years in prison when he’s sentenced on March 28.

Late last month, Binance came under fire after its chief, Changpeng Zhao, stepped down and faced prison time after pleading guilty to settle a years-long US illicit finance probe — a move that triggered investors to pull about $956 million from the world’s largest crypto exchange.

Zhao’s agreement with authorities will also see Binance pay a $4.3 billion fine to settle the years-long illicit finance probe.

Following the incident, the price of Binance was still up over 1%, at $230.32.