Bitcoin breaks $50k level, its highest since 2021
The recent price boost indicates growing confidence in crypto markets.
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Bitcoin broke into the $50,000 resistance level earlier today at around 11:00 AM EST, the first time it has done so since December 2021.
While the feat marks a milestone for crypto in general, selling pressure from across major exchanges such as Binance and Coinbase has kept the alpha cryptocurrency’s price movement at a minimal pace.
The price rally comes in at an opportune time: roughly a month earlier, 11 spot Bitcoin ETFs were approved in the US by the Securities and Exchange Commission, although with a requisite amount of chaos.
For historical context, Bitcoin was trading by less than half of what it is today last year: BTC was playing around $22,000 as 2023 started, with the crypto industry barely making it out of the rubbles of the 2022 crash.
According to data from CoinShares, investment products categorized as digital assets saw inflows of $1.1 billion, bringing year-to-date inflows to $2.7 billion. Of this number, Bitcoin represented over 98% of inflows.
The recent price boost indicates growing confidence in crypto markets. This idea was countered roughly two weeks after the approval of the ETFs, when Grayscale, one of the largest cryptocurrency asset managers, was selling Bitcoin to Coinbase, transferring over $2.2 billion within that time. This selling pressure weighed down Bitcoin’s price. However, Grayscale’s selling appears to have eased, allowing prices to stabilize and rise again.
Meanwhile, the ETF products from BlackRock (IBIT) and Fidelity (FBTC) saw their highest opening-hour trading volume since January 22. Share prices for these ETFs rose 5% earlier today as the markets opened.
The rapid increase in institutional investment, as fueled by ETFs and other advances in the institutional crypto sector, has been touted as the primary driver for Bitcoin’s new momentum.
The tech industry’s rebound arc after the challenges of COVID-19 (silicon shortage, supply chain issues, etc.) is also seen as a major factor. Interestingly, Bitcoin has decoupled from the Nasdaq-100 index for the first time in four years.
Another factor that could be considered as a driver for Bitcoin’s latest price performance is the imminent “halving” event, expected to happen sometime in April this year. With the halving, Bitcoin’s scarcity will be pushed, propping up the idea of Bitcoin as a hedge against inflation and its value proposition as a deflationary asset.
While Bitcoin saw massive gains in 2021 when it hit an all-time high price above $69,000, its trajectory depends heavily on maintaining positive momentum and attracting institutional capital.
At the time of writing, Bitcoin is trading at $50,220 (based on data from CoinGecko). If interest declines again, the price could easily reverse course. For now, though, the return above the $50,000 level represents a triumphant return for the alpha cryptocurrency.
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