Bitcoin rises to highest level in year

On December 1, Bitcoin rose 2.87% to $38,834, its highest level this year. Other digital assets tracked by Bloomberg also rose. The rally pushed Bitcoin to its highest point since May 5 last year.

Bitcoin’s unexpected resurgence from a turbulent 2022 has defied skeptics who predicted the digital asset’s demise. After reaching an all-time high of nearly $69,000 in late 2021, the cryptocurrency plunged 64% in 2022 amid industry scandals and bankruptcies of some companies in the industry.

The cryptocurrency has received a boost recently as expectations grew that the U.S. Securities and Exchange Commission (SEC) would approve an exchange-traded fund (ETF) to invest directly in bitcoin after a decade of deliberation.

“Market sentiment is clearly bullish as more signs begin to emerge that a spot Bitcoin ETF appears to be on the horizon in the U.S.,” said Darius Tabatabai, co-founder of decentralized exchange Vertex Protocol.

A U.S. federal appeals court formally supported Grayscale Investments LLC’s launch of a Bitcoin-based ETF in late October.

“The bulls have basically made a comeback and brought some much-needed optimism to a market that has been pretty bleak for a while,” Tabatabai said.

Geopolitical tensions also fueled the rally, said Matthew J. Maley, chief market strategist at Miller Tabak + Co., LLC. "I think investors feel that the increase in geopolitical hot spots around the world increases the likelihood that cryptocurrencies will become significant currencies sooner than previously expected," Maley said.

Cathie Wood previously said that she would not hesitate to bet on Bitcoin instead of gold or cash to protect against the risk of deflation in the next decade.

The ARK Investment Management boss reiterated her view that an era of falling prices is coming, supported by new technologies such as artificial intelligence, electric vehicles, robotics, genome sequencing and blockchain, a view she has held since 2021 even as markets focus on rising inflation risks.

Asked by Bloomberg’s Merryn Talks Money podcast which of the three assets she would choose to hold for a decade, Wood said: “Bitcoin, hands down. Bitcoin is both an inflation hedge and a deflation hedge because there is no counterparty risk and institutions are almost non-existent.” It is “digital gold.”

Wood is one of the most optimistic investors in cryptocurrencies, and she expects such assets to benefit from the development and innovation of new technologies. She previously predicted that Bitcoin is expected to exceed $1 million in the next decade. The current price of Bitcoin is around $35,000, about half of its peak in 2021.

Wood also said she expects AI and Bitcoin to converge, enabling “microtasking and division of labor on a global scale in ways we can’t even imagine now.”