Jan 2, 2024 - Economy

Bitcoin hits $45K for first time since April 2022

Data: CoinGecko; Chart: Axios Visuals
Data: CoinGecko; Chart: Axios Visuals

Bitcoin's 12-month surge continued into the new year, with the price of the original cryptocurrency hitting $45,000 Tuesday for the first time since April 2022.

Driving the news: Anticipation for the approval of spot-bitcoin exchange traded funds, or ETFs, has helped drive BTC price for months, and a report by Reuters over the weekend helped reignite speculation that a green light could be imminent.

  • BTC is up over 6% in the last 24 hours, and 14.2% over the past 30 days. Over the last year it is up 171%.

The big picture: For the broader crypto industry, it's not just bitcoin price —there are several numbers signaling a turnaround in sentiment.

Zoom in: The CoinMarketCap Fear & Greed Index, for one, is solidly in the greed territory.

  • The index takes in a number of factors, including the relative amount of futures contracts, social media data, price velocity among major cryptocurrencies and the weight of bitcoin in the market.
  • It hit "Extreme Greed" in early December, and then bitcoin price pulled back, which is expected. Now it's just normal, non-cautionary levels of greed, which is another way of saying that market participants are feeling more confident than not.

Meanwhile, bitcoin's "dominance" is declining. Bitcoin Dominance, aka BTC.D, is a measure that reflects how much of the total crypto market capitalization is represented by just bitcoin.

  • When times are bad, BTC.D typically goes up as true believers retreat to bitcoin. Conversely, when times are good, BTC.D drops.
  • Be smart: This may sound counterintuitive. But when the market is greedy, bitcoin price will go up — it's just that lesser coins will go up faster. So traders start making bets on other cryptocurrencies as they look to make money more quickly.
  • BTC.D has been trending down gently, mostly holding steady between 55% and 50%.

Bitcoin Difficulty, at 72 trillion, is the highest it has ever been.

  • Difficulty is an indirect measure of the computing power on the Bitcoin network. These are the machines doing the proof-of-work exercises that make Bitcoin so secure.
  • This means that miners, the backbone of the network, have not only been sticking around but investing more (yes, the machines they're buying have also gotten much better).
  • Rising difficulty is actually nothing new. It's been going up since July 2021. In fact, it's doubled since December 2022.

The bottom line: Bitcoin, which fell to around $16,000 14 months ago, has had a "4" as its first digit going back to Dec. 5.

Go deeper: Stablecoins are ticking up again, slowly

Go deeper