Bitcoin, the world’s most prominent cryptocurrency, rose above $38,000 on Friday for the first time this year. The cryptocurrency rose about 1.5% on Friday to trade above the $38,000 level for the first time since May 2022, in line with gains in other crypto assets such as Ether and Solana, reported CNBC.
Here are the main factors that fueled the rally in Bitcoin.
Resolving Binance’s Legal Issues
One of the main factors contributing to Bitcoin’s rise is the resolution of Binance’s legal issues.
Changpeng “CZ” Zhao, CEO of Binance, the largest crypto exchange in the world, agreed to plead guilty to federal charges brought by the US Department of Justice, Reuters reported.
This settlement has instilled renewed confidence among investors, easing concerns about the exchange’s future and its impact on the broader cryptocurrency market, which is still recovering from the 2022 FTX fiasco.
The development also comes within a month of FTX founder Sam Bankman-Fried’s conviction on federal fraud and conspiracy charges.
Anticipation of Bitcoin ETF Approval
The rise in Bitcoin has also come on the back of expectations of the approval of a Bitcoin Exchange Traded Fund (ETF). An ETF would allow traditional investors to gain exposure to Bitcoin without directly owning or managing the cryptocurrency, potentially expanding its investor base and driving further demand.
Bitcoin (BTC) has been range bound since March, oscillating between a support level of $25,000 and a resistance level of $30,000.
In October, rumors of a spot ETF approval sparked a price rally that drove BTC from below $27,000 to above $38,000 on Friday.
Investors also weighed the minutes of the Federal Open Market Committee meeting, which was also released on the day of the settlement. The minutes showed that officials expressed little appetite to cut interest rates anytime soon, which could have a dampening effect on risk assets like Bitcoin.
The Fed’s hawkish stance is likely to keep Bitcoin prices in check in the short term, but the overall outlook for the cryptocurrency remains positive.