Bitcoin has broken the $50,000 mark for the first time in over two years, propelled by anticipation of interest rate reductions later this year and recent regulatory approvals for US exchange-traded funds (ETFs) designed to track its price. The cryptocurrency has seen a remarkable 16.3% surge since the beginning of the year, reaching its highest point since December 27, 2021, on Monday.
At 12:56 p.m. EST (1756 GMT), Bitcoin exhibited a 4.96% increase on the day, settling at $49,899 and maintaining a steady presence around the $50,000 level.
Antoni Trenchev, co-founder of the crypto lending platform Nexo, emphasized the significance of this milestone, stating, “$50,000 is a significant milestone for bitcoin after the launch of spot ETFs last month not only failed to elicit a move above this key psychological level but led to a 20% sell-off.”
Crypto-related stocks also experienced an upswing on Monday, with Coinbase, Riot Platforms, Marathon Digital, and MicroStrategy all posting notable gains.
The surge in Bitcoin’s value is attributed to increased inflows into Bitcoin spot ETFs, following the approval of the first U.S. spot bitcoin ETFs by the U.S. securities regulator on January 10. Matteo Greco, a research analyst at fintech investment firm Fineqia International, highlighted the slowing outflows from Grayscale Investment’s Grayscale Bitcoin Trust, pointing to a shift in investor preferences towards BTC Spot ETFs.
Analysts predict a gradual buildup of flows into the new ETFs, with estimates ranging from $10 billion in 2024 by Bernstein to $50 billion to $100 billion this year alone by Standard Chartered analysts. The market is eagerly awaiting the U.S. SEC’s decision on seven pending applications for ETFs tied to the spot price of ether, expected by May.
Investors are also eyeing the upcoming Bitcoin “halving” in April, a process designed to slow the release of bitcoin, with a capped supply of 21 million tokens, of which 19 million have already been created. The previous three halvings, especially the one in 2020, have historically led to a rally in Bitcoin prices.
Ben Laidler, global markets strategist at eToro, summarized the significance of the current market dynamics, stating, “With [the] fourth bitcoin halving, a first Fed interest rate cut, and potential ethereum spot ETF approval, all are significant for what is the smallest, youngest, and most retail-dominated asset class.”
