Bitcoin Hits $50,000
Bitcoin has reached $50k milestone for the first time since December 2021. This was due to several factors including ETFs inflows, positive market sentiments, and whales accumulating BTC.
Uno…
Bitcoin has hit the $50,000 milestone for the first time since December 2021. The flagship asset reached the level on February 12 after climbing almost 4% in 24 hours as it continued its positive start to February.
BTC has soared 17% in the past seven days, according to CoinMarketCap data. This complements its over 16% gains in just one month as it recovered lost gains.
The flagship asset struggled earlier this year, especially after spot Bitcoin exchange-traded funds were approved. Many expected the approval to be the catalyst that sent BTC to the moon, but it was a sell-the-news event.
The flagship asset bled for weeks, dropping from around $48k to $38k by January 23. The decline was mostly because Grayscale sold Bitcoin to match the outflows from its GBTC ETF as investors redeemed shares.
Why Bitcoin is Rising
With that phase over, selling pressure has eased, and the asset is back in recovery mode. The recovery mode has been on for over two weeks now, and it has seen the asset record substantial gains.
This is mostly down to more inflows going into other ETFs compared to outflows from GBTC. Last week, net inflows into the ETFs were over $1 billion. By comparison, ProShares BITO and Grayscale GBTC saw limited outflows.
Additionally, the whales are busy accumulating more Bitcoin despite the price performance. This has further strengthened the market perception that Bitcoin is set for a bull run.
Meanwhile, the recent bull run was also partially fueled by the sentiment that there will be a capital injection into the crypto industry soon. Although the Fed had said it wouldn’t be cutting interest soon, possible cuts are expected this year, which could benefit Bitcoin.
The timing of this rally to $50k couldn’t be better. It comes when Bitcoin halving is only about two months away. This could set the flagship asset up for a sustained rally that might see it beat its previous high. Historically, Bitcoin halving has caused its price to soar.
However, it will not be smooth sailing for BTC over the next few months. There will still be Bitcoin sell-offs from GBTC outflows. For instance, Genesis is expected to liquidate $1.6 billion of GBTC holdings in the coming months.
Rally Mostly Organic
The most remarkable thing about the current Bitcoin rally is how it has been largely organic, without FOMO playing any major part. Most investors are focused on the macroeconomic numbers, which is appropriate given how the S&P 500 has performed.
Future events, such as the earning reports of several companies on the S&P and the US inflation CPI data, could also influence how investors approach Bitcoin and other risk-on assets.
