Cryptocurrency Is Booming In U.S Market After Bitcoin Hitting $50K Level For The First Time In More Than Two Years

Cryptocurrency Is Booming In U.S. Market For The First Time In More Than Two Years

Washington/London (Feb 12) – Bitcoin hit the $50K 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.

The cryptocurrency has risen 16.3% 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% 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 ETF’s (Exchange-traded funds) last month not only failed to elicit a move above this key psychological level but led to a 20% sell-off,” said Antoni Trenchev, co-founder of crypto lending platform Nexo.

Crypto stocks also enjoyed a boost on Monday, with crypto exchange Coinbase (COIN.O) up 4.9% and crypto miners Riot Platforms (RIOT.O) and many more notable buyer of bitcoin weere up by 10.2%.

Many of Wall Street’s biggest names have offered spot bitcoin ETFs, including BlackRock, the world’s largest asset manager. But despite widespread anticipation over their launch, the price of bitcoin fell roughly 15 percent in the days following the SEC’s approval.

“Following a disappointing launch of several bitcoin ETFs we’re now seeing continued inflows into newly issued funds, and I think we’re seeing much more organic demand for bitcoin as a result,” said James Butterfill, head of research at crypto investment group CoinShares.

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.

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.

“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.

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.

“With 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.

Ethereum Was Been Affected Due To Bitcoin

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

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.

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.

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.