Bitcoin’s longest winning run since May lifted the token past US$44 000, sparking questions about whether the breakout increasingly reflects a conviction that looser US Federal Reserve monetary policy lies ahead.

The largest digital asset climbed for six days through to Tuesday, adding roughly 16%, and was consolidating the gains in early Asian trading on Wednesday. Its 2023 rebound from last year’s crypto rout now stands at 165%.

Much of the rally is pegged to the prospect of the US allowing its first spot bitcoin exchange-traded funds, paving the way to a wider investor base. BlackRock and Fidelity Investments are among those awaiting the outcome of their applications, with some analysts expecting a green light by January.

But ETF hype has shadowed bitcoin since June, when asset managers began seeking approval to roll out the funds. That’s leading some to ask if the token’s surge is now drawing more succor from wagers on Fed rate cuts next year.

“Surely the ETF story is well and truly priced?” said Tony Sycamore, a market analyst at IG Australia. The high volatility, “jet-fuelled” move up in bitcoin is instead a reminder that crypto is “more responsive to a Fed pivot and policy than other asset classes”, he said.

For now, bitcoin momentum is overshadowing any concerns that the surge is at risk of becoming too stretched. Smaller virtual currencies such as ether, avalanche and meme-crowd favourite dogecoin have also been advancing.

The bullish overall mood is evident across a range of countries. Bitcoin on South Korea’s Upbit and Bithumb exchanges was trading about 4% above the prevailing global price on Wednesday, a return of the so-called “kimchi premium” that made headlines during the pandemic-era bull run in digital assets.

Halving

In Abu Dhabi, crypto mining hardware retailer Phoenix Group jumped 35% on its debut on Tuesday. The firm is the first crypto-related listing in the Middle East. In El Salvador, former President Nayib Bukele said in a posting on X this week that the nation’s bitcoin investments had turned profitable. He’s running for re-election after stepping down as president last week.

Another prop for sentiment is the so-called bitcoin halving due next year, which will cut in half the amount of tokens that bitcoin miners receive as reward for their work. The quadrennial event is part of the process of capping bitcoin supply at 21 million tokens. The coin hit records after the last three halvings.