Bitcoin Surges Past $50k as Spot ETFs Gain Momentum
Bitcoin Hits Over Two-Year High Amid ETF Inflows
The price of bitcoin reached an over two-year high on Tuesday, surpassing key levels as consistent capital flows poured into recently approved spot exchange-traded funds.
Bitcoin Crosses $50,000 Mark Amid ETF Inflows
Bitcoin rose 3.2% to $50,160.2 by 20:13 ET (05:13 GMT), breaking the $50,000 mark for the first time since December 2021. The cryptocurrency was now approximately $19,000 away from setting new record highs.
ETF Inflows Boost Bitcoin Gains
Gains in bitcoin came as capital continued to flow into the recently-approved spot ETFs, with net inflows of over $1 billion in the past week, according to a report by digital asset management firm CoinShares. BlackRock Inc’s iShares Bitcoin Trust saw the largest inflows for the week, totaling about $690 million.
Bitcoin Benefits from Slowing Grayscale Trust Outflows
The cryptocurrency also saw a positive impact from slowing outflows from Grayscale Bitcoin Trust, which gained approval from the Securities and Exchange Commission (SEC) to convert into a spot ETF. This conversion led to the release of approximately $2 billion worth of bitcoin onto the open market, causing significant price losses in the cryptocurrency.
Bitcoin Recovers from Spot ETF Approval
Following the approval of the spot ETFs, the token experienced a 20% decline, but it has since recouped all of those losses.
Analysts Expect Continued ETF Inflows
Analysts at Bernstein anticipate flows into the new ETFs to surpass $10 billion in 2024. Markets are also closely watching an upcoming halving event in April, which historically triggers a rally in the cryptocurrency.
Broader Crypto Market Responds to ETF Approval
Optimism over the potential approval of a spot ETF drove gains in broader crypto markets, with the world’s second-largest cryptocurrency rising 6.3% to a one-month high of $2,672.25. U.S.-listed crypto stocks also saw strong gains, with Coinbase Global Inc rising 3.8%, and bitcoin miner Marathon Digital Holdings Inc surging 14.2%. MicroStrategy Inc, the largest corporate holder of bitcoin, rose 11%.
Challenges in the Crypto Market
Despite the recent positive developments, the broader crypto market is still facing challenges, including decreased retail interest and regulatory concerns. Spot trading volumes in bitcoin remain below their 2021 and 2017 peaks, impacting the token’s price movements.
Regulatory Uncertainty and Future Outlook
The SEC and Coinbase are currently embroiled in a legal battle that could influence the regulatory landscape for crypto tokens, potentially shaping their future standing.
