Bitcoin touches key $50,000 level for first time in two years

Bitcoin briefly hit the key level of $50,000 for the first time in over two years in overnight trading, marking a remarkable comeback from the crypto scandals and wipeouts that had cast doubt on the industry’s viability. The largest digital asset was trading at $49,902 as of 9.00am UAE time on Tuesday, having earlier risen to as high as $50,379. The token has tripled in value since the start of last year following a 64 per cent plunge in 2022 . Bitcoin remains about $17,000 below its all-time high of $67,000, achieved in November 2021. Bitcoin's wild price fluctuations since its introduction 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 after the global financial crisis, the latest rally has been driven by optimism that last month’s US approval of spot Bitcoin exchange-traded funds 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. “I’d also note that the momentum players are getting excited as well.” The resurgence in crypto prices comes as expectations of looser monetary policy burnish the allure of riskier assets. “The appetite for risk has trickled over into digital assets as well,” said Chris Newhouse, a DeFi analyst at Cumberland Labs. Optimism about the quadrennial Bitcoin halving due in April is also filtering across crypto. Halving cuts the quantity of Bitcoin that miners receive for operating the powerful computers that verify transactions on the blockchain. The event is often viewed a support for prices based on historical precedent. Shares of crypto-related companies also gained on Monday, with Bitcoin proxy MicroStrategy rising 11 per cent, trading platform Coinbase Global increasing 3.8 per cent and miner Marathon Digital Holdings jumping 14.2 per cent. The positive sentiment spread to Asian stocks related to digital assets, including advances in companies such as Japan’s Monex Group and Woori Technology Investment in South Korea. Bitcoin has recovered all its losses since the May 2022 implosion of so-called stablecoin TerraUSD, which set in motion a wave of failures that ultimately helped to bring down Sam Bankman-Fried’s FTX exchange in November 2022. By the time FTX collapsed, the crypto market was already months into the "crypto winter, which also claimed 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 Mr Bankman-Fried convicted of fraud and Binance co-founder Changpeng Zhao awaiting sentencing for US sanctions violations and failing to implement anti-money laundering policies, crypto prices have moved higher as analysts see fewer looming risks to the industry. Nine US spot Bitcoin exchange-traded funds debuted on January 11, while the more than decade-old Grayscale Bitcoin Trust converted into an ETF on the same day. The accessibility of ETFs promises to widen the investor base for the token. The new funds have attracted about $9 billion so far, while a more than $6 billion outflow from the Grayscale fund since its conversion seems to be losing steam. “We are a little ways away from there being broader acceptance,” Susan Thompson, head of SPDR Americas Distribution at State Street Global Advisors, said. “Most advisers we talk with are taking a wait-and-see approach.” Financial advisers need to examine an asset’s correlations over time to assess potential diversification benefits, whereas Bitcoin’s impact is hard to predict as the token is relatively short-lived, Ms Thompson said. Aside from ETF inflows, sentiment towards Bitcoin is “typically positive” during the Lunar New Year holidays currently under way in Asia, Fundstrat Global Advisors wrote in a note.

Bitcoin touches key $50,000 level for first time in two years

The digital coin has tripled in value since the start of last year following a 64 per cent plunge in 2022