Bitcoin tops $45,000: Cryptocurrency at highest for nearly two years as investors cheer stellar start to 2024

The price of bitcoin hit its highest level in almost two years as the world's largest cryptocurrency started 2024 with a bang.

The digital currency surpassed $45,000 for the first time since April 2022 amid speculation that US authorities are about to give the industry a much-needed credibility boost.

Speculation is growing that the US Securities and Exchange Commission (SEC) will approve the first cryptocurrency-focused exchange-traded funds (ETFs) in the coming days, opening the market to millions more investors such as BlackRock and Fidelity . ready to offer them to customers.

ETFs give investors and traders easy exposure to anything from the FTSE 100 to the price of oil.

Neil Wilson, an analyst at trading brand Markets.com, said: "This is a key moment for bitcoin's maturity."

The stellar start to 2024 was applauded by renowned cryptocurrency investor Cameron Winklevoss, who, along with his twin brother Tyler, was believed to be the first bitcoin billionaire.

“Bitcoin already looks like it will be the best-performing asset of the year (same as last year),” he said on X, the social media platform formerly known as Twitter.

But there is still a lot of caution surrounding cryptocurrencies and no guarantee that regulators will approve the products.

The industry has been hit by controversy in recent years with figures such as FTX founder Sam Bankman-Fried convicted of fraud and facing prison.

The SEC has rejected multiple applications to launch spot bitcoin ETFs over the past two years, arguing that the cryptocurrency market is vulnerable to manipulation and issuers would be unable to protect investors.

And just last month, SEC Chairman Gary Gensler slammed the industry for flaunting existing regulations, describing it as the "Wild West." He said: 'There is a lot of non-compliance with the laws. There has been too much fraud. This is the Wild West and people get hurt.'

Anatoly Crachilov of investment manager Nickel Digital Asset Management said: "If there is no approval, there will be a liquidation." Markets have firmly priced in an approval.'

Yesterday Bitcoin rose to $45,912, having doubled in value last year with gains of almost 160 percent.

That repaired some of the damage caused by a 2022 accident that reverberated across the sector.

The token outperformed global stocks and gold, but still remains well below its 2021 pandemic-era record of nearly $69,000.

Likewise, Ether, the digital currency linked to the Ethereum blockchain network, rose 1.2 percent yesterday, after having gained 91 percent in 2023.

The rally also comes amid hopes that central banks will begin cutting interest rates, which has sent investors back to riskier assets. But this asset class still has deep credibility problems.

Changpeng Zhao, founder of Binance, the world's largest cryptocurrency exchange, pleaded guilty to violating US anti-money laundering rules in November. He is prohibited from leaving the United States before sentencing.

But what has hurt the most is Bankman-Fried's surprising fall from grace. FTX filed for bankruptcy last year after a spike in withdrawals that the company was unable to pay.

The fallen wunderkind, 31, was found to have operated a scheme that funneled billions into his Alameda Research business venture.

Some of the money was used to finance political campaigns and buy luxury homes in the Bahamas. He now faces up to 120 years in prison after a US court found him guilty of fraud.