(Bloomberg) --Bitcoin has now more doubled in value this year in a surprising resurgence from a tumultuous 2022 that had some skeptics predicting the demise of digital assets.
The largest cryptocurrency by market value rallied for a third day, pushing the price back to around $35,000, the highest level in about 18 months. Bitcoin tumbled 64% last year amid industry scandals and bankruptcies. It reached a record of almost $69,000 in late 2021.
Growing expectations that the U.S. Securities and Exchange Commission will authorize exchange-traded funds that invest directly in the cryptocurrency after a decade of deliberation has fueled a more than 25% rally over the past two weeks.
"Sentiment is clearly bullish as more and more signs start to reveal what appears to be a likely, imminent listing for a spot Bitcoin ETF in the U.S.," said Darius Tabatabai, co-founder at decentralized exchange Vertex Protoco.
On Monday, a federal appeals court formalized a victory for Grayscale Investments LLC in its bid to create an ETF based on Bitcoin. Last week, Bitcoin briefly surged 10%, the highest price since August, on an erroneous report that BlackRock Inc. had won SEC approval for an ETF.
Tabatabai added that the exchange saw a new all-time record for shorts being liquidated over the past 24 hours, with one of the highest volume days ever.
"Bulls largely came roaring back and brought some much needed optimism to what has been a fairly bleak market for some time," Tabatabai said.
Matthew J. Maley, chief market strategist at Miller Tabak + Co., LLC, said that geopolitical strains are also contributing to the rally.
"I think investors are thinking that the increase in geopolitical hotspots in the world is raising the odds crypto will be an important currency quicker than they thought previously," Maley said.
The three-day rally is the largest since March. When Silicon Valley Bank collapsed on March 10, Bitcoin rallied for four consecutive days, climbing above $26,000 for the first time since June of last year.
While Bitcoin prices might experience a short-term price pullback, the currency is poised to continue rising over the long term, according to James Butterfill, head of research at CoinShares.
"Before the ETF hype, Bitcoin's price closely mirrored the expected probabilities of a December rate hike," Butterfill said. "As these probabilities decrease in light of increasing treasury yields, it seems it could further support prices, poising to shape the next bull market for Bitcoin over the longer term."
