(Bloomberg) — Bitcoin hovers around $50,000 after reaching notable levels for the first time in more than two years, marking a remarkable comeback from crypto scandals and sweeps that called into question the industry's viability. It became.
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The largest digital asset was trading at $50,100 as of 6:16 a.m. Tuesday in London, having previously risen to $50,379. After plunging 64% in 2022, the token has tripled in value since the beginning of last year. Bitcoin remains about $19,000 below its all-time high reached in November 2021.
The wild price fluctuations seen since Bitcoin's introduction over a decade ago have long been one of its major attractions for speculators. Originally promoted as an alternative to the traditional financial system, the recent rally has been driven by optimism that the U.S. approval of spot Bitcoin exchange-traded funds last month is leading to mainstream acceptance. There is.
Read more: What are these new Bitcoin ETFs and how do they work?
“There's a lot of talk about inflows into this asset, and it's interesting to note that the momentum players are excited as well,” said Matt Maley, chief market strategist at Miller Tabak.
The resurgence in crypto prices comes as expectations for easing monetary policy make riskier assets more attractive. “Risk appetite is trickling down to digital assets,” said Chris Newhouse, DeFi analyst at Cumberland Institute.
Shares of crypto-related companies also rose on Monday, with Bitcoin agency MicroStrategy up 11%, trading platform Coinbase Global up 3.8% and miner Marathon Digital Holdings up 14.2%. Rose.
Positive sentiment also spread to Asian stocks related to digital assets, including the expansion of companies such as Japan's Monex Group and South Korea's Woori Technology Investment.
Bitcoin has recovered all its losses since the implosion of stablecoin TerraUSD in May 2022. The debacle set in motion a series of failures that ultimately contributed to the shutdown of Sam Bankman Fried's FTX exchange in November 2022.
At the time of FTX's decline, the cryptocurrency market had already begun a months-long crash that had also affected hedge fund Three Arrows Capital and financier Celsius Network. However, the decline of FTX, which was once one of the top cryptocurrency exchanges in terms of trading volume, caused even more damage as token prices stagnated due to a lack of liquidity.
Currently, with Bankman Freed convicted of fraud and Binance exchange co-founder Chao Changpeng awaiting sentencing for violating US sanctions and failing to comply with anti-money laundering policies, analysts Cryptocurrency prices are rising as investors see the industry's immediate risks decreasing.
Nine U.S. spot Bitcoin exchange-traded funds debuted on January 11, with the more than 10-year-old Grayscale Bitcoin Trust converting to an ETF on the same day. The ease of access to ETFs is expected to widen the token investor base. The new fund has attracted more than $9 billion so far, but outflows from the Grayscale fund, which has exceeded $6 billion since its conversion, appear to be losing momentum.
“We're still a little ways off from broader acceptance,” Susan Thompson, head of SPDR Americas distribution at State Street Global Advisors, told Bloomberg TV. “Most of the advisors we're talking to are taking a wait-and-see attitude.”
Financial advisors need to study asset correlations over time to assess potential diversification benefits, but Bitcoin's relatively short token lifespan makes it difficult to predict the impact. said Mr. Thompson.
Optimism regarding Bitcoin's once-in-four-year halving, scheduled for April, is also widespread across cryptocurrencies. The halving reduces the amount of Bitcoin that miners receive to power the powerful computers that verify transactions on the blockchain. This event is often seen as supporting prices based on historical precedent.
Apart from ETF inflows, sentiment towards Bitcoin during the current Lunar New Year holiday in Asia is “generally positive,” Fundstrat Global Advisors said in a note.
About $135 million worth of cryptocurrency trading positions betting on lower prices were liquidated on Monday, according to data from Coinglass, compared to the day the U.S. spot ETF won regulatory approval on January 10. It was the highest amount since.
—With assistance from Isabel Lee, Sunil Jagtiani, Svashree Ghosh, and Siddhartha Shukla.
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