© Reuters. FILE PHOTO: A bitcoin is seen in an illustration photograph taken at La Maison du Bitcoin in Paris, France, June 23, 2017. REUTERS/Benoit Tessier/File Photo
By Hannah Lang and Elizabeth Howcroft
WASHINGTON/LONDON (Reuters) -Bitcoin hit the $50,000 level for the first time in more than two years, as the world's largest cryptocurrency was boosted by expectations of interest rate cuts later this year and last month's regulatory go-ahead for U.S. exchange-traded funds designed to track their price.
The cryptocurrency is up 16.3% so far this year, hitting its highest since December 27, 2021 on Monday. As of 12:56 p.m. EST (1756 GMT), bitcoin was up 4.96% on the day at $49,899, having fluctuated around $50,000. level.
“$50,000 is a major milestone for bitcoin after the launch of spot ETFs last month not only failed to spark a move above this key psychological level, but sparked a 20% sell-off,” said Antoni Trenchev. , co-founder of the crypto lending platform. Nexus.
Cryptocurrency stocks also enjoyed a boost on Monday, with cryptocurrency exchange Coinbase (NASDAQ 🙂 up 4.9% and cryptocurrency miners Riot Platforms (NASDAQ 🙂 and Marathon Digital (NASDAQ 🙂) up 10.8% and 11.9%, respectively. Shares of software company MicroStrategy, a notable buyer of bitcoin, rose 10.2%.
The price of ether, the second largest cryptocurrency, rose 4.12% to $2,607.57.
Global stock indexes also rose on Monday, as traders looked for signs on when the US Federal Reserve might start cutting interest rates. Both analysts and financial market expectations point to May as a possible start for rate cuts this year.
ETF EXUBERANCE
The main driver of bitcoin's recent price appreciation “can be attributed to increased inflows into BTC spot ETFs,” said Matteo Greco, research analyst at fintech investment firm Fineqia International, in a note from investigation.
On January 10, the US securities regulator approved the first US spot bitcoin ETFs, a milestone for the world's largest cryptocurrency and for the broader crypto industry, which had been trying to bringing a product of this type to the market for more than a decade.
Greco, in particular, noted that capital outflows from Grayscale Investment's Grayscale Trust, which received approval from the U.S. Securities and Exchange Commission (SEC) in January to become 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 recorded a total net inflow of around $1.2 billion during the same period, marking the highest weekly entry since its launch,” he said. .
Analysts at Bernstein have estimated that flows into the new ETFs will gradually build up to over $10 billion by 2024, while analysts at Standard Chartered (OTC:) have said the products could attract between $50 billion and $100 billion. dollars only this year. Other analysts have said inflows could reach $55 billion over five years.
The market is also analyzing seven pending applications with the US SEC for ETFs linked to the ether spot price. The SEC is due to issue a final decision on several of those proposals in May.
Investors are also eagerly awaiting the next bitcoin “halving,” scheduled for April, analysts say. That process is designed to slow the release of bitcoin, whose supply is limited to 21 million tokens, of which 19 million have already been created. Bitcoin rallied in all three previous halvings, the most recent of which was in 2020.
“With () the fourth bitcoin halving, a first interest rate cut from the Fed and the possible approval of an ethereum spot ETF, everything is significant for what is the smallest asset class, younger and more dominated by retail,” said Ben Laidler, global markets strategist at eToro.
