Bitcoin topped $50,000 on Monday for the first time since December 2021, according to CoinGecko data, suggesting growing confidence in the digital currency after a tumultuous two years marked by scandals and bankruptcies. are doing.
“The tailwinds for digital assets are the strongest they've been in a while,” thanks to inflows into exchange-traded funds (ETFs), speculation about future monetary easing, and the upcoming halving, says Christopher, DeFi analyst at Cumberland Institute.・Mr. Newhouse said. luck.
BTC plummeted 64% in 2022, hitting a low of $16,000 due in part to the FTX implosion. But despite rising about 129% over the past 12 months, prices are still below the all-time high of about $69,000 set in November 2021.
The Securities and Exchange Commission's approval of 10 spot Bitcoin ETFs on January 11th allows retail and institutional investors to gain exposure to BTC without needing to own the underlying asset. The convergence of traditional finance and digital assets has been hailed as a turning point for cryptocurrencies, with companies like BlackRock and Fidelity launching funds.
However, despite hopes that new retail and institutional investors would fuel the bull market, BTC initially looked volatile.
The overwhelming impact of the SEC approval on BTC prices was primarily due to the outflow of more than $6 billion from the 10-year-old Grayscale Bitcoin Trust, which operated as a closed-end trust and was previously It is said that the company had surrounded investors who were now free to liquidate their funds. To Bloomberg. The GBTC outflow caused the price to drop to $39,505, with BTC down about 15% since the confirmation date.
But it is now clear that outflows are slowing and prices are returning. In the first few weeks of trading, daily outflows averaged $500 million, but have steadily declined since January 26. Friday's outflow was just $51.8 million, the lowest since approval, according to Bloomberg data.
Meanwhile, inflows into nine other ETFs have been accelerating, with cumulative net inflows of about $1.2 billion last week, nearly half of their previous total.
“This strong buying pressure is pushing prices up and has been the main driver of recent growth,” said Matteo Greco, research analyst at investment firm Finekia International. luck.
Jeff Kendrick, head of digital assets research at Standard Chartered, said if ETF inflows continue at this pace, adding about $1 billion per week, “Bitcoin will rise every day.”
In addition to this, the Federal Reserve has indicated that it will cut interest rates in the spring, which “will provide further tailwinds for Bitcoin prices,” said Markus Thielen of 10x Research. luck. During periods of high interest rates, highly liquid and volatile assets like Bitcoin tend to become less attractive.
Meanwhile, VettaFi financial futurist Dave Nadig recently attributed the growth to built-in optimism ahead of the April halving. As small miners are forced out of the market, the monetary rewards they receive will be cut in half, thereby reducing supply.
“The halving is a reason for everyone to focus on Bitcoin,” he said. luck. “There is a mechanical reason why we expect this number to increase: supply is being taken offline.”
In fact, the past four halving events have been followed by bull markets. When the first event took place in November 2012, the price of BTC was around $12. A year later, it had risen to over $1,000. BTC was at $8,755 during its most recent halving in May 2020, but it soared furiously towards $69,000 the following year.
