Bitcoin has reached the $50,000 milestone, marking its highest level in over two years. The surge in the world’s largest cryptocurrency is attributed to anticipation of interest rate cuts later this year and recent regulatory approvals for U.S. exchange-traded funds (ETFs) tracking its price.
So far this year, Bitcoin has surged by 16.3%, with its value hitting its highest since December 27, 2021, on Monday. As of 12:56 p.m. EST (1756 GMT), Bitcoin was up by 4.96% at $49,899, hovering around the $50,000 level.
According to Antoni Trenchev, co-founder of crypto lending platform Nexo, “$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.”
The positive momentum extended to crypto-related stocks, with Coinbase up by 4.9%, and crypto miners Riot Platforms and Marathon Digital up by 10.8% and 11.9%, respectively. Shares of software firm MicroStrategy, known for its significant Bitcoin investments, also rose by 10.2%.
Ether, the second-largest cryptocurrency, saw a 4.12% increase, reaching $2,607.57.
Global stock indexes also saw slight gains as traders awaited cues on potential interest rate cuts by the U.S. Federal Reserve. The approval of the first U.S. spot Bitcoin ETFs by the U.S. securities regulator on January 10 has been considered a pivotal moment for Bitcoin and the broader crypto industry.
Analysts are closely monitoring the outflows from Grayscale Investment’s Grayscale Bitcoin Trust (GBTC.P), which has slowed down recently, indicating a shift towards spot Bitcoin ETFs. It’s projected that flows into the new ETFs could reach $10 billion in 2024, according to analysts at Bernstein, with estimates from Standard Chartered analysts suggesting $50 billion to $100 billion inflows this year alone.
Investor attention is also focused on pending applications for ETFs tied to the spot price of Ether, with the U.S. SEC expected to make final decisions on several proposals by May.
Additionally, analysts highlight the upcoming Bitcoin “halving” in April, a process aimed at slowing the release of new Bitcoin, which historically has spurred rallies in its price.
Ben Laidler, global markets strategist at eToro, emphasized the significance of these events, 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.”
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