Bitcoin today hit $39,000 per coin for the first time since a brutal digital asset crash in May 2022 that brought with it a long and painful bear market. 

The virtual coin has since made a terrific comeback: at the start of January, it was trading for less than $17,000 per coin; it is now up 128%.

Could this mean we’re seeing the beginning of a bull run? Some experts say it’s only up from here. 

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A lot has happened in the crypto space since blockchain project Terra collapsed last year, leading to a plunge in every virtual coin and token and lots of bankruptcies—most notably, mega exchange FTX. 

Chased by a toxic mix of industry failures alongside historically high interest rates and it looked like the crypto would never make it back. 

But institutions—including Wall Street giant BlackRock—have since shown big interest in the crypto sphere: the firm and other prestigious names in finance have applied to the Securities and Exchange Commission for a spot Bitcoin exchange-traded fund (ETF).

And the Federal Reserve might just be done with fiscal tightening, which last year caused investors to avoid “risk-on” assets such as equities and crypto. 

In a report Friday, crypto asset manager Grayscale’s research team said that it sees “gradually improving crypto fundamentals”—so long as the central bank “has finished tightening and the U.S. economy can avoid a ‘hard landing’ (recession).”

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Grayscale also mentioned next year’s halving, which will see Bitcoin miner rewards slashed in half and lead to more scarcity in the market—and therefore should be positive for valuations.”

And James Butterfill, head of research at digital asset manager CoinShares, told Decrypt that investors are wanting to branch out—and this could be good for Bitcoin.

“The increasing correlation between bonds and equities—now at a record high of 42%, excluding the COVID-19 period—is prompting a search for effective diversification among investors,” he said, adding that “Bitcoin has proven to offer significantly greater diversification compared to other asset classes.”

As more investors realize this, the higher the price of the asset will go in the new year, he argued. 

Meanwhile, Amberdata’s director of derivatives Greg Magadini told Decrypt that the data shows that “option traders are very bullish for BTC spot prices and expect prices to move higher relatively soon.”

If investors do finally get the Bitcoin ETF the SEC has repeatedly rejected for the better part of a decade, capital could flood the market, analysts at CryptoQuant predicted

Although the future may look bright right now, there are other things to consider. 

“There are also headwinds facing Bitcoin’s price,” Sam Callahan from Swan Bitcoin said. “These include the risk of a recession and the potential denial of a Spot Bitcoin ETF,” he continued, adding that a denial from the SEC could lead to a “shock to the market.”

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Edited by Ryan Ozawa.

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