 "Bitcoin")
Bitcoin jumped to $50,000 for the first time in more than two years, staging a remarkable comeback from a series of crypto industry scandals and bankruptcies that had raised questions about the viability of digital assets.
The original cryptocurrency has tripled in value since the start of last year, climbing back from a 64 per cent plunge in 2022. Bitcoin last traded at $50,000 in December 2021. The price is still below the all-time high of almost $69,000 reached in November 2021.
The wild price fluctuations seen since the introduction of Bitcoin more than a decade ago have long been one of the main attractions to speculators. While originally promoted as an alternative to the traditional financial system, the latest rally has been driven by optimism that last month’s US approval of exchange-traded funds to own Bitcoin directly is leading to greater mainstream acceptance.
“There is a lot of talk about inflow of money into this asset,” said Matt Maley, chief market strategist at Miller Tabak & Co. “I’d also note that the momentum players are getting excited as well.”
The resurgence in crypto prices comes as investors in the broader finance markets re-embrace risk amid expectations that the Federal Reserve is moving closer to easing monetary policy. Higher interest rates tend to dull the allure or risker assets such as crypto.
)
“The appetite for risk has trickled over into digital assets as well,” said Chris Newhouse, a DeFi analyst at Cumberland Labs.
Also Read
Bitcoin has recovered all its losses since the May 2022 implosion of stablecoin TerraUSD, which set in motion the wave of failures that ultimately helped bring down Sam Bankman-Fried’s FTX exchange in November 2022.
By the time FTX went down, the crypto market was already months into the rout that claimed TerraUSD, hedge fund Three Arrows Capital and lender Celsius Network. But the fall of FTX, once one of the top crypto exchanges by trading volume, was even more damaging, with token prices stagnating as liquidity dried up.
Now with Bankman-Fried convicted of fraud, and Binance co-founder founder Changpeng Zhao awaiting sentencing for failing to implement anti-money laundering policies and US sanctions violations, crypto prices have moved higher as analysts see fewer looming risks to the industry.
Nine US spot Bitcoin exchange-traded funds debuted on Jan. 11, while the more than decade-old Grayscale Bitcoin Trust converted into an ETF the same day. The accessibility of ETFs promises to widen the investor base for the token. The new funds have attracted a net of about $8 billion so far, while the more than $6 billion outflow from the Grayscale fund since its conversion now appears to be losing steam.
“The downturn of the last couple weeks was in large part due to outflows from Grayscale,” said Greg Moritz, co-founder at crypto hedge fund AltTab Capital. “Those have now slowed and we’re seeing, as expected, net inflows pick up.”
