As the new year begins, the cryptocurrency market has shown remarkable strength, signaling a possible revival of the sector. Bitcoin’s price rose significantly by almost 10% on the first day of the year, surpassing the $45,000 mark, a level not seen since April 2022.
The rally appears to be linked to expectations that the US Securities and Exchange Commission (SEC) will approve a series of Bitcoin ETFs in the first week of the year.
According to market experts, the US agency could start approving ETF applications as early as Tuesday (2), and the news appears to have acted as a catalyst not just for Bitcoin, but for the cryptocurrency market in general.
Cryptocurrencies on the rise
In addition to Bitcoin, Ethereum (ETH), Solana (SOL) and Avalanche (AVAX) also recorded significant increases, ranging between 5% and 11%.
Furthermore, growing demand and market optimism have increased the cost of holding long positions, or bullish bets, in the Bitcoin-pegged perpetual futures market.
According to data from Matrixport, global average perpetual funding rates reached a record high of 66% per year during Asian time trading.
Perpetual contracts are financial instruments that function like futures without an expiration date. They use a financing percentage mechanism to keep prices in line with the spot market.
Positive funding rates indicate that perpetuals are trading at a premium to the spot price, and buyers are paying sellers to keep their positions open. High interest rates, like the current ones, indicate a very optimistic market.
Markus Thielen, head of research and strategy at Matrixport and founder of 10x Research, notes that the funding rate has reached a new peak of 66% per year, a clear indication of the bullish mood in the cryptocurrency market.
Furthermore, he highlights that, surprisingly, Bitcoin funding rates remained high during the holiday season, reflecting continued optimism and expectations of an upcoming Bitcoin ETF approval.
This wave of optimism in the cryptocurrency market signals a potential turning point for the industry, which has faced significant challenges over the past year.
The SEC’s approval of Bitcoin ETFs could further legitimize cryptocurrencies as a viable asset class and attract a new group of investors, including traditional financial institutions and retail investors looking to diversify their portfolios.
However, despite the current optimism, experts advise caution. The cryptocurrency market is notoriously volatile and rapid and significant price movements are common.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
