Investing.com– The price of bitcoin hit a more than two-year high on Tuesday, with the world's largest cryptocurrency crossing key levels amid continued capital flows into newly approved spot exchange-traded funds.
rose 3.2% to $50,160.2 at 20:13 ET (05:13 GMT), crossing the $50,000 mark for the first time since December 2021. The token was now about $19,000 away from hitting new highs. historical.
The gains in bitcoin came amid steady capital flows into newly approved spot ETFs, which have seen net inflows of more than $1 billion in the past week, digital asset management firm CoinShares said in a report on Monday. BlackRock Inc's iShares Bitcoin Trust (NASDAQ 🙂 (NYSE 🙂) recorded the largest inflows of the week, with around $690 million.
The token also benefited from slowing outflows from Grayscale Bitcoin Trust (NYSE:), which gained approval from the Securities and Exchange Commission (SEC) last month to convert it to a spot ETF. This conversion led to the release of around $2 billion in bitcoins to the open market, causing large losses in the price of the cryptocurrency.
The token had fallen as much as 20% after the approval of spot ETFs, but has now recovered all those losses.
Bernstein analysts noted that an element of “fear of missing out,” or FOMO, was also driving some retail interest in the cryptocurrency, and that the token was well-positioned to hit record levels in FOMO-driven buying.
Bernstein expects flows into the new ETFs to exceed $10 billion in 2024.
Markets were also squarely focused on an upcoming halving event this year, expected in April. The event reduces the generation rate of new bitcoins by 50% and has historically spurred a rally in the cryptocurrency.
The most recent halving took place in May 2020, and the lead-up to the event saw a 50% rise in bitcoin prices.
Optimism over the possible approval of a spot ETF fueled gains in broader crypto markets, with the world's No. 2 cryptocurrency rising 6.3% to a one-month high of $2,672.25.
US-listed cryptocurrency stocks posted strong gains on Monday, with the exchange Coinbase Global Inc (NASDAQ 🙂 rose 3.8%, while bitcoin miner Marathon Digital Holdings Inc (NASDAQ 🙂 rose 14.2%. MicroStrategy Inc. (NASDAQ:), which is the largest corporate holder of bitcoin, rose 11%.
But the broader crypto market is still struggling with declining retail interest, especially after a series of high-profile frauds, bankruptcies, and regulatory actions over the past two years.
This was evident as spot trading volumes in bitcoin remained well below their 2021 and 2017 peaks. Lower trading volumes also played a role in the token's rapid gains through 2023 as bitcoin benefited from the absence of active sellers.
The SEC and Coinbase are currently embroiled in a legal battle that could dictate the nature of crypto tokens and lead to a change in their regulatory status.
