In the early morning of February 13, Bitcoin exceeded the $50,000 mark for the first time in two years. It reached a maximum of $50,363, a 24-hour increase of 3.53%. Set a new high since December 2021.
According to “Fortune”, this rise is due to three aspects. The first is the inflow of funds into the Bitcoin ETF. The Bitcoin ETF received a net inflow of US$1.8 billion in the first month of its launch. Secondly, there are expectations for the Federal Reserve to cut interest rates. Previously, on February 4, Federal Reserve Chairman Powell stated that he would cut interest rates after March. Finally, there is the Bitcoin halving that will take place in April.
According to Bloomberg, the SEC’s approval of the ETF is not the main reason for Bitcoin’s rise. The main reason is the outflow of more than $6 billion from the 10-year-old Grayscale Bitcoin Trust (GBTC), which once served as Closed-end trust funds operate where investor funds were previously locked up and are now free for investors to liquidate. The previous flight of GBTC funds helped push the price down to $39,505. Bitcoin has fallen by about 15% since the date of ETF approval.
But it is now clear that outflows are slowing and prices are recovering. In the weeks leading up to the trade, outflows averaged $500 million per day, but since January 26, outflows have been steadily declining. According to the latest data from Bloomberg, outflows totaled just $51.8 million on Friday, the lowest since the approval.
At the same time, capital inflows into the other nine ETFs are accelerating. Last week, the cumulative net inflow was approximately US$1.2 billion, almost half of the total inflow so far. Analysts say this strong buying pressure is driving prices higher and is the main reason for the recent growth.
Jeff Kendrick, head of digital asset research at Standard Chartered Bank, has previously said that if ETF inflows continue at this rate, adding approximately $1 billion per week, Bitcoin will rise every day.
On top of that, the Federal Reserve has said it will cut interest rates in the spring, which “provides another reason for Bitcoin prices to rise,” said Marcus Thielen of 10x Research. During periods of high interest rates, highly liquid, volatile and risky assets like Bitcoin tend to become less attractive.
Meanwhile, VettaFi’s financial futurist Dave Nadig attributes Bitcoin’s rise to optimism ahead of the April halving. The Bitcoin halving gave everyone a reason to pay attention to Bitcoin, and there was a mechanical reason for that: Bitcoin supply was declining.
In fact, according to the history of Bitcoin’s past halving cycles, a Bitcoin bull market occurred after the first four halving events. The first bull run occurred in November 2012, when BTC price was around $12. The most recent halving occurred in May 2020, when the BTC price was US$8,755, and it rushed towards US$69,000 in 2021.
According to CNBC, CoinShares research director James Butterfield said that demand for spot Bitcoin ETFs remains strong, with net inflows of US$1.1 billion in the past week and net inflows of US$2.8 billion since launch. On Friday alone, the ETF gained 12,000 Bitcoins, significantly exceeding the daily rate of approximately 900 Bitcoins being added.
Investors have been eyeing key resistance around $48,600. Analysts say that if Bitcoin can hold above this level, it could reach a new high above $50,000 and possibly even an all-time high. Bitcoin hit a historical record of $68,982.20 on November 10, 2021.
Well-known investor Anthony Pompliano said on social media The sophisticated crowd “likes speculation just as much, if not more.” If retail investors like something, smart money will invest a lot of money.
We know that in 2022, the price of Bitcoin plummeted to $16,000 due to the disintegration of FTX, the collapse of the Terra ecosystem, and other high-profile crashes, a drop of approximately 75%.
In addition to plummeting prices and the collapse of large companies in the industry, layoffs and closures are also common trends in the entire industry, and this trend will continue until 2023.
According to Coindesk, although 2023 will be remembered as the starting point of the crypto bull market, Bitcoin price trends have been quite sluggish for most of the year. On October 1, the price of Bitcoin was only $27,000, a rise of more than 65% in 2023, but considering Bitcoin’s historical highs, this is only a relatively small recovery.
In the last quarter of 2023, after years of delaying and rejecting attempts by Wall Street asset management giants to launch Bitcoin spot ETFs, the U.S. Securities and Exchange Commission finally gave the green light to Bitcoin ETFs in early 2024. The price of Bitcoin increased by nearly 60% in the last 3 months of 2023, closing at over $42,000.
According to Fortune, Bitcoin has recovered to rise by approximately 129% in the past 12 months, driven by positive factors. But it is below the all-time high of nearly $69,000 set in November 2021.