Bitcoin has reached the $50,000 mark for the first time since 2021, signaling a significant milestone in its resurgence driven by increasing demand for exchange-traded funds (ETFs). The cryptocurrency’s price surged to this closely watched level, marking a remarkable comeback from past scandals and doubts about the industry’s sustainability.
As of 10:52 a.m. Tuesday in Singapore, Bitcoin was trading at $49,960, having earlier peaked at $50,379. This surge reflects a tripling in value since the beginning of last year, following a significant 64% decline in 2022. However, Bitcoin still remains approximately $19,000 below its all-time high achieved in November 2021.
The volatile price fluctuations characteristic of Bitcoin have historically attracted speculators, and the recent rally has been fueled by optimism surrounding the approval of spot Bitcoin ETFs in the US last month, signaling increasing mainstream acceptance.
Matt Maley, chief market strategist at Miller Tabak & Co., noted, “There is a lot of talk about inflow of money into this asset. I’d also note that the momentum players are getting excited as well.”
The resurgence in crypto prices coincides with expectations of looser monetary policies, enhancing the appeal of riskier assets. Chris Newhouse, a DeFi analyst at Cumberland Labs, remarked, “The appetite for risk has trickled over into digital assets as well.”
Shares of companies related to cryptocurrencies also saw gains, with Bitcoin proxy MicroStrategy Inc. rising by 11%, trading platform Coinbase Global Inc. increasing by 3.8%, and miner Marathon Digital Holdings Inc. jumping by 14.2%.
The positive sentiment extended to Asian stocks connected to digital assets, with companies like Japan’s Monex Group and South Korea’s Woori Technology Investment Co. witnessing advances.
Bitcoin’s recovery from the fallout of stablecoin TerraUSD in May 2022, which led to a series of failures culminating in the downfall of FTX exchange in November 2022, has contributed to the recent surge. With figures like Sam Bankman-Fried convicted of fraud and Binance exchange’s co-founder Changpeng Zhao facing legal issues, analysts perceive fewer risks looming over the industry, further boosting prices.
The introduction of nine US spot Bitcoin exchange-traded funds on January 11, along with the conversion of the more than decade-old Grayscale Bitcoin Trust into an ETF, has widened the investor base for the token. These new funds have attracted approximately $9 billion so far, while the outflow of more than $6 billion from the Grayscale fund since its conversion seems to be slowing down.
Susan Thompson, head of SPDR Americas Distribution at State Street Global Advisors, emphasized that broader acceptance of Bitcoin ETFs might still be some way off, with most advisers adopting a cautious “wait-and-see” approach.
Furthermore, optimism surrounding the quadrennial Bitcoin halving scheduled for April is also influencing sentiment in the crypto market. The halving event reduces the quantity of Bitcoin that miners receive for verifying transactions, historically supporting prices.
