Bitcoin Breaks $50K Barrier, Riding High After ETF Premiere

Bitcoin, the leading cryptocurrency globally, has exceeded the $50,000 threshold for the first time since late 2021, marking a notable rebound from its dip below $40,000 following the debut of spot ETFs.

Following the introduction of spot ETFs on January 11, which initially caused a brief hiccup in bitcoin’s value, the cryptocurrency’s bull market, which began in January 2023, has entered a phase characterized by Fear of Missing Out (FOMO), as its value eclipsed $50,000 for the first time in over two years.

Despite significant capital inflows into the new spot ETFs during their initial weeks, investor focus has shifted to the substantial capital outflows from the high-fee Grayscale Bitcoin Trust (GBTC). This resulted in a drop in bitcoin’s value to as low as $38,500 shortly after the ETFs became operational.

However, recent weeks have witnessed a slowdown in outflows from GBTC, while significant capital inflows have continued into the new ETF offerings. On February 8, Grayscale only shed 1,850 bitcoins, whereas the other nine ETFs added nearly 11,000 tokens to their reserves. The following day, Grayscale lost 2,252 coins, while the other nine ETFs accumulated more than 13,000. To put things in perspective, only 900 newly mined bitcoins enter the market daily, a number set to decrease to 450 per day following the Bitcoin halving in April.

What is Bitcoin?

Bitcoin is a decentralized digital currency, often referred to as cryptocurrency, that operates on a peer-to-peer network without the need for a central authority or intermediary. Created by an anonymous entity known as Satoshi Nakamoto in 2009, Bitcoin relies on blockchain technology to record all transactions securely and transparently.

It enables users to send and receive payments globally with relatively low fees and without the need for traditional banking systems. Bitcoin’s supply is limited to 21 million coins, making it deflationary by design and often considered a hedge against inflation. As a highly volatile asset, Bitcoin’s value fluctuates based on market demand, speculation, and technological developments within the cryptocurrency ecosystem.

Is the crypto winter over?

Bitcoin peaked at around $69,000 in November 2021. However, 2022 presented significant challenges, such as the collapse of the Terra ecosystem and the demise of crypto exchange FTX, along with its founder Sam Bankman-Fried, in November 2022. Bitcoin concluded 2022 slightly above $16,000, marking a 75% decline from its peak.

While 2023 experienced a substantial bull market phase for crypto, bitcoin’s price movement remained relatively subdued for much of the year. Despite starting at just $27,000 on October 1, representing a more than 65% increase for 2023, the cryptocurrency’s recovery was modest compared to its previous highs.

However, the last quarter of 2023 saw increasing confidence that the SEC, following years of delays and rejections, would approve spot bitcoin ETFs in early 2024. As a result, bitcoin’s price surged by nearly 60% in the final three months of 2023, ending the year above $42,000.

Bitcoin Breaks $49K Barrier, Bulls Aim for $50K Amid Rapid Market Surge

In the past week and the preceding month, bitcoin (BTC) has experienced a notable 16.7% increase since Jan. 12, 2024. By 10:00 a.m. Eastern Time on Monday, Feb. 12, it crossed the $49K threshold. Within just 45 minutes, it briefly touched $50,000 per unit on Bitstamp, though it retreated slightly after facing strong resistance.

In a mere 60-minute span, an impressive $25.57 million in BTC short positions were wiped out as the price surged. Presently, bitcoin’s market cap stands at approximately $979 billion, constituting 52.9% of the total crypto market. Major trading pairs for BTC on Monday included USDT, FDUSD, USD, USDC, and KRW.

In South Korea, bitcoin’s spot market value is even higher, surpassing the $50K mark with a premium price of $50,665 per unit on Bithumb, compared to the global rate of $49,856. Other South Korean platforms like Upbit and Korbit reflect similar elevated rates. This current valuation of BTC hasn’t been observed since December 2021, exceeding 800 days, except for a brief spike to $49K on Jan. 11, 2024.

With its current price at $49,856, BTC is only 28.3% away from its peak at $69K, reached on Nov. 10, 2021. It remains the tenth most significant asset globally by market cap, trailing Meta’s $1.212 trillion valuation. Bitcoin’s current value significantly surpasses its worth from the same period last year, when it traded between $21,500 and $22,500.

Spot Bitcoin ETF Inflows Accelerate, Boosting Bullish Sentiment

As Wall Street trading commenced on February 12, Bitcoin swiftly surged towards the $50,000 milestone, reaching $50,229.

This surge follows strong inflows into spot Bitcoin ETFs late last week, with over $1.1 billion in net fresh funds pouring into these investment vehicles, according to a CoinShares report released on Monday.

Interest in United States spot Bitcoin ETFs has been steadily increasing, with inflows hitting their second-best day of the week prior, totaling over $400 million across nine products. Despite outflows from GBTC, ETF inflows have remained positive for 11 consecutive days, indicating growing investor confidence in these investment instruments.

Traders are optimistic that ETFs alone could drive Bitcoin’s price higher, potentially challenging its all-time highs in the months ahead.

Moreover, BTC has sustained its upward trajectory despite concerns about potential selling pressure stemming from the liquidation of $1.6 billion worth of Grayscale Bitcoin Trust (GBTC) holdings by Genesis, a crypto lender under bankruptcy protection.

Conclusion

In conclusion, Bitcoin’s breakthrough beyond the $50,000 barrier following its debut in the ETF market marks a pivotal moment in the cryptocurrency’s journey toward mainstream acceptance and adoption. The ETF premiere has opened doors for a wider range of investors to participate in Bitcoin’s growth potential, bolstering its status as a legitimate asset class within traditional financial frameworks. As Bitcoin continues to capture headlines and attract attention from both retail and institutional investors, its resilience and enduring appeal become increasingly apparent.

While fluctuations and uncertainties remain inherent in the cryptocurrency market, the momentum generated by Bitcoin’s surge past $50,000 underscores its relevance and significance in shaping the future of finance. As the cryptocurrency landscape continues to evolve, Bitcoin’s ability to transcend barriers and maintain its upward trajectory highlights its position as a transformative force in the global economic landscape, poised for further growth and innovation.