Bitcoin, the dominant cryptocurrency, achieved a significant milestone by surpassing the $50,000 mark, reaching its highest value in over two years. This remarkable surge reflects a meteoric rise for Bitcoin, boasting a notable 16% increase in the year 2024, signifying a robust recovery. The surge to $50,000 comes amid growing optimism about potential interest rate cuts later in the year and recent regulatory approval for US exchange-traded funds (ETFs) tracking Bitcoin’s price.
Antoni Trenchev, co-founder of the crypto lending platform Nexo, acknowledged the significance of reaching the $50,000 mark, attributing the achievement to the recent launch of spot ETFs. Although spot ETFs initially failed to push Bitcoin above this crucial psychological level, they triggered a 20% sell-off.
The positive momentum extended beyond Bitcoin, impacting crypto-related stocks. Coinbase shares rose by 4.9%, while crypto miners Riot Platforms and Marathon Digital experienced increases of 10.8% and 11.9%, respectively. Notably, software firm MicroStrategy, a prominent Bitcoin buyer, saw its shares rise by 10.2%.
Ether, the second-largest cryptocurrency, also observed an uptick in its value, rising by 4.12% to reach $2,607.57. Global stock indexes displayed a similar trend, with slight increases as investors anticipated signals on potential interest rate cuts by the US Federal Reserve, suggesting May as a possible starting point for rate adjustments.
Matteo Greco, a research analyst at fintech investment firm Fineqia International, attributed the recent Bitcoin price surge to increased inflows into BTC spot ETFs. The approval of the first US spot Bitcoin ETFs by the US securities regulator on January 10 marked a significant milestone for the cryptocurrency industry. Greco highlighted a slowdown in outflows from Grayscale Investment’s Grayscale Bitcoin Trust (GBTC), which recently gained approval from the US Securities and Exchange Commission (SEC) to convert to an ETF. Concurrently, BTC Spot ETFs witnessed a total net inflow of approximately $1.2 billion, marking the highest weekly inflow since their launch.
Analysts predict substantial growth in inflows into the new ETFs, with estimates ranging from $10 billion to potentially $100 billion in 2024 alone. The market eagerly anticipates the SEC’s decision on seven pending applications for ETFs tied to the spot price of Ether, expected by May. Investors are closely monitoring the upcoming Bitcoin “halving” in April, a process designed to reduce the release rate of Bitcoin, historically resulting in significant rallies in its value. Ben Laidler, global markets strategist at eToro, underscores the importance of these developments for the cryptocurrency market, emphasizing its status as the smallest, youngest, and most retail-dominated asset class.