Bitcoin has broken above $40,000 for the first time since May 2022 as it rides a wave of momentum on broad enthusiasm about U.S. interest rate cuts and as traders bet on the imminent approval of U.S. stock market-traded bitcoin funds.

The world's biggest cryptocurrency hit as high as $41,748 on Monday, its highest since April 2022, seemingly casting off the funk that had settled over crypto markets following the collapse of FTX and other crypto-business failures last year.

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It was last up 4% at $41,627. Its 50% rally since mid-October has "seemed to mark a decisive shift away from the bearishness of 2022 and early 2023," said Justin d'Anethan - head of business development for Asia-Pacific at Keyrock, a digital assets market making firm.

D'Anethen said evidence of institutional buying through November showed a new leg of interest and that although reversals ahead were not inconceivable, lows hit around $16,000 a year ago "probably marked the bottom".

Bitcoin is up by over 150% so far this year.

Bitcoin-investor Microstrategy (MSTR.O) last week disclosed it bought an additional $593 million in bitcoin during November.

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Meanwhile, riskier investments and other interest-rate sensitive assets, such as gold, have also rallied hard over the last few weeks as markets wager that the U.S. Federal Reserve has finished hiking rates and will start cutting early in 2024.