Bitcoin has reached the $50,000 threshold, marking a significant milestone not witnessed since December 27, 2021. The surge in the world’s largest cryptocurrency is attributed to growing anticipation of interest rate cuts later in the year and the recent regulatory approval for U.S. exchange-traded funds (ETFs) designed to track its value.
As of 12:56 p.m. EST (1756 GMT) on Monday, Bitcoin demonstrated a 4.96% increase for the day, standing at $49,899, with fluctuations around the $50,000 level. Antoni Trenchev, co-founder of the crypto lending platform Nexo, commented, ” $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 a boost, with Coinbase (COIN.O) up 4.9%, and crypto miners Riot Platforms (RIOT.O) and Marathon Digital (MARA.O) surging by 10.8% and 11.9%, respectively. Shares of MicroStrategy (MSTR.O), a notable Bitcoin buyer, rose by 10.2%.
The second-largest cryptocurrency, Ether, observed a 4.12% increase, reaching $2,607.57.
Global stock indexes showed slight gains as traders sought cues on potential interest rate cuts by the U.S. Federal Reserve, with expectations pointing towards May as a likely starting point for rate adjustments.
Matteo Greco, a research analyst at fintech investment firm Fineqia International, attributed Bitcoin’s recent price appreciation to the increased inflow into BTC spot ETFs. The approval of the first U.S. spot Bitcoin ETFs on January 10 by the U.S. securities regulator marked a significant development for the cryptocurrency and the broader crypto industry.
Greco highlighted the slowing outflows from Grayscale Investment’s Grayscale Bitcoin Trust (GBTC.P) and the substantial inflow of about $1.2 billion into BTC Spot ETFs, the highest weekly inflow since their launch.
Analysts foresee gradual growth in flows into the new ETFs, estimating amounts ranging from $10 billion to $100 billion in 2024, while awaiting the U.S. SEC’s final decision on seven pending applications for ETFs tied to the spot price of Ether, expected by May.
Investors are also anticipating the upcoming Bitcoin “halving” in April, a process designed to slow the release of Bitcoin. With Bitcoin’s supply capped at 21 million tokens, of which 19 million have already been created, analysts expect a positive impact on its value, as observed in the three previous halvings, the most recent of which occurred in 2020.
Ben Laidler, Global Markets Strategist at eToro, emphasized the significance of the fourth Bitcoin halving, a potential Fed interest rate cut, and the approval of an Ethereum spot ETF, collectively impacting what he describes as “the smallest, youngest, and most retail-dominated asset class.”
