Bitcoin commenced trading at $42,000 at the start of the week, but a surge in take-profit and sell orders caused broad market liquidation following its recent peak at $44,700. The market saw a tug-of-war between bulls and bears, with sell-offs on Tuesday and Wednesday forcing BTC to drop below $40,000 ahead of the US interest rate announcement.

Bitcoin quickly recovered to the US$43,000 level on Thursday as the Federal Reserve maintained stable rates and hinted at future rate reduction in the coming year. The US Financial Accounting Standards Board (FASB) added to the market boost by enacting new accounting rules requiring corporations including as MicroStrategy, Tesla, and Block to evaluate their cryptocurrency holdings at fair value. These guidelines, which go into effect in 2025, will allow corporations to monitor real-time swings in asset values.

BTC is currently consolidating at $42,000, representing a 36% decrease from its peak but a phenomenal 159% year-to-date gain. The key resistance levels are $43,200 and $43,500, with support at $41,200, reflecting an overall optimistic outlook. Ethereum, like BTC, exhibits comparable profit and loss trends. Despite being 52% lower than its all-time high, Ethereum is up 12% month to date and 91% year to date.

El Salvador obtained regulatory clearance for the world’s first Bitcoin bonds, highlighting the shifting environment of digital finance. This action underscores El Salvador’s commitment to incorporating Bitcoin into its economic infrastructure following the country’s decision to make Bitcoin legal tender in September 2021. The introduction of Bitcoin bonds indicates a growing acceptance of cryptocurrencies as genuine financial instruments, which might draw funds from people and institutions looking for portfolio diversification and exposure to Bitcoin’s upside. Other governments may pursue similar approaches as the crypto sector evolves, with legal frameworks defining the future of these financial assets. Investors should keep a careful eye on these developments for clues about the global convergence of traditional and digital finance.

A noteworthy event expected for the coming year is the Bitcoin halving in April 2024. This four-year event involves half miners’ earnings in order to regulate the introduction of new Bitcoins, contributing to Bitcoin’s deflationary character. Historical trends from 2012, 2016, and 2020 show that Bitcoin Halving precedes a price spike in the months leading up to the event and in the months following.

Another imminent step is the likely approval of spot Bitcoin Exchange-Traded Funds (ETFs). This regulatory milestone might have far-reaching consequences for the cryptocurrency sector, providing investors with direct and regulated access to Bitcoin. The approval of spot Bitcoin ETFs might be a watershed moment in the financial world, drawing a broader spectrum of investors and helping to cryptocurrencies’ mainstream acceptability.