Bitcoin Surges Past $50,000 Amidst ETF Approval and Rate Cut Speculation

Bitcoin, the world’s largest cryptocurrency, has reached the $50,000 milestone for the first time in over two years, fueled by expectations of forthcoming interest rate adjustments and recent regulatory greenlights for U.S. exchange-traded funds (ETFs) tracking its price.
Bitcoin exchangeThe cryptocurrency’s value has surged by 16.3 percent since the beginning of the year, reaching its highest point since December 27, 2021, on Monday. As of 12:56 p.m. EST (1756 GMT), bitcoin was trading at $49,899, marking a 4.96 percent increase for the day, Reuters news report said.

Antoni Trenchev, co-founder of Nexo, a crypto lending platform, commented on the significance of bitcoin breaching the $50,000 threshold, attributing the rally to the recent launch of spot ETFs. Antoni Trenchev noted that despite a previous failure to surpass this psychological barrier after spot ETFs were introduced, this time the market has responded positively, despite earlier concerns leading to a 20 percent sell-off.

On Monday, crypto-related stocks also witnessed a surge, with Coinbase climbing by 4.9 percent and crypto miners Riot Platforms and Marathon Digital jumping by 10.8 percent and 11.9 percent respectively. Shares of software firm MicroStrategy, known for its significant bitcoin holdings, also rose by 10.2 percent.

Ether, the second-largest cryptocurrency, followed suit, with its price rising by 4.12 percent to reach $2,607.57.

The broader financial markets also experienced gains on Monday, with global stock indexes edging higher as traders awaited signals on potential interest rate adjustments by the U.S. Federal Reserve. Analysts and market expectations are pointing towards a possible commencement of rate cuts in May.

The approval of U.S. spot bitcoin ETFs on January 10 by the U.S. Securities and Exchange Commission (SEC) has been a pivotal factor in driving bitcoin’s recent price surge. Matteo Greco, a research analyst at Fineqia International, highlighted the increased inflow into BTC spot ETFs as a primary driver for bitcoin’s appreciation.

Greco noted a significant reduction in outflows from Grayscale Investment’s Grayscale Bitcoin Trust (GBTC) since the approval of spot ETFs. He observed a total net inflow of approximately $1.2 billion into BTC Spot ETFs, marking the highest weekly inflow since their launch.

Analysts anticipate continued growth in ETF inflows, with projections ranging from $10 billion to $100 billion in the coming years. The market is also anticipating the U.S. SEC’s decision on pending applications for ETFs linked to the spot price of ether, expected by May.

Furthermore, investors are eagerly awaiting bitcoin’s next halving, projected to occur in April. This event, designed to reduce the rate of bitcoin issuance, has historically spurred rallies in bitcoin’s price, with the most recent halving occurring in 2020.

Ben Laidler, global markets strategist at eToro, emphasized the significance of these developments for the cryptocurrency market, describing them as critical events for the nascent asset class, which is characterized by its youth, small size, and retail investor dominance.

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