Bitcoin topped $50000 level on Monday this week for the first time in more than two years. The world’s largest cryptocurrency achieved this significant milestone last time when it traded at $50000 in December 2021. Bitcoin recovered remarkably from the recent setbacks faced by the crypto market. All these setbacks including scandals and bankruptcies created doubts among the investors worldwide on the sustainability of the digital assets.
The value of Bitcoin has tripled since the beginning of last year. It has bounced back from a 64% decline in 2022. Despite this surge, the currency price couldn’t surpass its all-time high value nearly $69000 recorded in November 2021. The main reason behind this surge is claimed as ETF approval by the Securities and Exchange Commission last month.
Factors Driving The Rally
- Recent approval of the Bitcoin ETF in the US stock market by the Securities and Exchange Commission created huge expectations among the traders and investors who want exposure to Bitcoin without going through the hassle of buying it directly. Pomp Investments founder Anthony Pompliano told CNBC on Monday that bitcoin ETFs sucked up 5% of the entire tradable supply of bitcoin in 30 days.
“There is a lot of talk about the inflow of money into this asset. I’d also note that the momentum players are getting excited as well,” Matt Maley, Chief Market Strategist at Miller Tabak & Co. told Bloomberg.
- Investors in the broader financial market anticipate a shift in the US Federal Reserve’s monetary policy, expecting the Federal Reserve to cut interest rates this year. This change in sentiment has created bullishness not only in the cryptocurrency market, but also in the stock market, with the S&P 500 closing above 5000 for the first time ever before extending a strong rally in the first two months of 2024.
Though the Fed and Chairperson Jerome Powell have declined such news on rate-cut, investors are still positive about the prospect of easier monetary policy this year.
Bitcoin suffered a huge loss since the Implosion of stablecoin TerraUSD in May 2022 followed by a series of failures leading to the downfall of FTX Exchange in November 2022. Recent legal developments related to FTX Exchange-founder Bankman-Fried’s conviction for fraud and the legal issues faced by Binance Co-founder Changpeng Zhao have also reduced risk in Crypto market resulting in the continuous upward movement in prices.
The digital token recently traded at about $50,300. The rise in value has put bitcoin’s market cap just shy of $1 trillion, according to CoinMarketCap.
The introduction of nine US spot Bitcoin ETFs on January 11 along with the conversion of the Grayscale Bitcoin Trust into an ETF, has made a wide investor base for Bitcoin. The new funds have attracted almost $8 billion while the outflow from the Grayscale fund became slow since its conversion.
The positive sentiment is also developing with the quadrennial Bitcoin halving event scheduled in April. The ongoing Lunar New Year holidays in Asia has built up a positive sentiment towards the Cryptocurrency market and is described as “Typically positive”, according to Fundstrat Global Advisors.
According to the analysts from Standard Chartered, last week, Bitcoin hit the highest level of the current year at $47565 and its sudden rebound after several weeks of weak trading, following the approval of spot-ETFs puts the coin back on track to reach $100000 by year-end.
Also Read: Bitcoin ETF Approval Rumor