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 year after 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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