Bitcoin hits $50000 level for first time in over two years

Bitcoin hits $50,000 level for first time in more than two years

/ 08:36 AM February 13, 2024

Bitcoin hits $50,000 level for first time in more than two years

A bitcoin is seen in an illustration picture taken at La Maison du Bitcoin in Paris, France, June 23, 2017. REUTERS/Benoit Tessier/File photo

WASHINGTON/LONDON   -Bitcoin hit the $50,000 level for the first time in more than two years as the world’s largest cryptocurrency was buoyed by expectations of interest rate cuts later this year and last month’s regulatory nod for U.S. exchange-traded funds designed to track its price.

The cryptocurrency has risen 16.3 percent so far this year, on Monday touching its highest since Dec. 27, 2021. At 12:56 p.m. EST (1756 GMT), bitcoin was up 4.96 percent on the day at $49,899, having oscillated around the $50,000 level.


“$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 percent sell-off,” said Antoni Trenchev, co-founder of crypto lending platform Nexo.


Crypto stocks also enjoyed a boost on Monday, with crypto exchange Coinbase up 4.9 and crypto miners Riot Platforms and Marathon Digital up 10.8 percent and 11.9 percent , respectively. Shares of software firm MicroStrategy — a notable buyer of bitcoin — were up 10.2 percent .

The price of ether, the second-largest cryptocurrency, was up 4.12 percent at $2,607.57.

READ: World stocks at two-year high, U.S. inflation data in focus

Global stock indexes also edged higher on Monday, as traders looked for cues on when the U.S. Federal Reserve might begin cutting interest rates. Analysts and financial market expectations both point to May as a potential start for rate cuts this year.

ETF exuberance

The primary driver behind bitcoin’s recent price appreciation “can be attributed to the increased inflow into BTC spot ETFs,” said Matteo Greco, a research analyst at fintech investment firm Fineqia International, in a research note.

The U.S. securities regulator on Jan. 10 approved the first U.S. spot bitcoin ETFs, a watershed for the world’s largest cryptocurrency and the broader crypto industry, which had been trying to bring such a product to market for more than a decade.


READ: US SEC approves bitcoin ETFs in watershed for crypto market

Greco in particular noted that outflows from Grayscale Investment’s Grayscale Bitcoin Trust — which received approval from the U.S. Securities and Exchange Commission (SEC)in January to convert to an ETF — have begun to slow.

“While GBTC recorded a cumulative outflow of $415 million last week, representing a significant reduction from previous weeks, BTC Spot ETFs saw a total net inflow of about $1.2 billion during the same period, marking the highest weekly inflow since their launch,” he said.

Analysts at Bernstein have estimated that flows into the new ETFs will build up gradually to cross $10 billion in 2024, while Standard Chartered analysts have said the products could draw $50 billion to $100 billion this year alone. Other analysts have said inflows could be $55 billion over five years.

7 pending applications for ETFs

The market is also eyeing seven pending applications in front of the U.S. SEC for ETFs tied to the spot price of ether. The SEC is due to deliver a final decision on several of those proposals by May.

Investors are also looking eagerly to the next bitcoin “halving,” expected in April, analysts say. That process is designed to slow the release of bitcoin, whose supply is capped at 21 million tokens – of which 19 million have already been created. Bitcoin rallied on the previous three halvings, the most recent of which was in 2020.

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“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,” said Ben Laidler, global markets strategist at eToro.

TAGS: Bitcoin, Coinbase, Exchange Traded Funds (ETFs)

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