Bitcoin held steady around the $50,000 mark, marking its return to a significant milestone not seen in over two years. This resurgence is quite impressive considering the setbacks and doubts the crypto industry faced due to various scandals and crashes.
As of Tuesday morning in London, the largest digital currency was trading at approximately $49,800, after reaching as high as $50,379 earlier. Its value has tripled since the beginning of last year, bouncing back from a steep 64% decline in 2022. Despite this remarkable recovery, Bitcoin still sits about $19,000 below its all-time high reached in November 2021.
The volatile nature of Bitcoin’s price, a characteristic it has maintained since its inception over a decade ago, has always attracted speculators. Originally touted as an alternative to traditional finance, the recent surge is fueled by optimism surrounding the US approval of spot Bitcoin exchange-traded funds (ETFs) last month, signaling growing acceptance in mainstream financial circles.
Matt Maley, chief market strategist at Miller Tabak & Co., noted the influx of capital into Bitcoin and highlighted the excitement among momentum-driven investors.
This surge in crypto prices coincides with expectations of looser monetary policies, driving investors towards riskier assets. Chris Newhouse, a DeFi analyst at Cumberland Labs, mentioned that the appetite for risk has spilled over into digital assets.
Companies associated with cryptocurrencies also experienced gains, with stocks like MicroStrategy Inc., Coinbase Global Inc., and Marathon Digital Holdings Inc. seeing notable increases.
In Asia, stocks related to digital assets also saw positive movements, reflecting the global sentiment towards cryptocurrencies.
Bitcoin has managed to recover all its losses since the collapse of stablecoin TerraUSD in May 2022, which triggered a series of failures in the market, including the downfall of FTX exchange in November 2022. With regulatory actions and legal troubles facing prominent figures in the industry, such as Sam Bankman-Fried and Changpeng Zhao, analysts see fewer imminent risks to the crypto market.
The introduction of nine US spot Bitcoin ETFs in January, along with the conversion of the Grayscale Bitcoin Trust into an ETF, has brought significant inflows of capital into the market. However, broader acceptance of these funds may take time, as many financial advisers remain cautious.
Additionally, optimism surrounding the upcoming Bitcoin halving in April, which reduces the rewards for miners, is contributing to positive sentiment in the market.
Despite the positive outlook, there are still occasional liquidations of crypto trading positions betting on lower prices, highlighting the ongoing volatility in the market.
