Bitcoin has climbed to $42,000 for the first time since April 2022, capping a 150% year-long rally since January 2023. The latest milestone comes after months pinned under the level amid the broader crypto retreat sparked by May's UST stablecoin unraveling.

Cooling inflation has strengthened conviction that the Federal Reserve's rate hike cycle nears its end, possibly reversing as soon as spring 2023. The shifting sentiment is broadly lifting cryptocurrencies alongside stocks like the S&P 500 as it approaches record peaks.

Bloomberg experts believe building optimism around long-awaited Bitcoin ETF approvals could offer additional fuel, with analyst James Seyffart eyeing a potential SEC decision between January 5-10th based on the latest filing subtleties.

Lingering Risks

Still, risks linger from unexpected shocks that could upend the rally despite some indicators flashing overheated readings. Bitcoin's relative strength index (RSI) has closed above 75 for over two weeks — typically signaling overextension.

However, historically Bitcoin has posted average further gains of 15% in the month following an RSI of 75. The latest push has also significantly outpaced both gold and equities, with open interest in CME Bitcoin futures hitting fresh records.

Halving

The 2024 Bitcoin "halving" remains central to many predictions eyeing fresh record peaks. The programmed supply-curbing event has preceded Bitcoin's past epic bull runs by cutting miner emissions in half.

Venn Link Partners founder Brian McCalmont sees Bitcoin possibly topping $50,000 before the next pronounced correction. 

The latest growth has lifted exchange operator Coinbase alongside big crypto holder MicroStrategy in a rising tide for the blossoming ecosystem.