Bitcoin Price Surpasses $50,000 After Spot ETF Launch Drives Demand

Unlock Editor’s Digest for free

Roula Khalaf, editor-in-chief of the FT, selects her favorite stories in this weekly newsletter.

The price of bitcoin traded above $50,000 on Monday for the first time since 2021, underscoring the sharp change in appetite for the token since the launch of large Bitcoin investment funds earlier this year.

The industry’s flagship cryptocurrency has gained nearly 15 percent since the start of the year, largely thanks to the U.S. Securities and Exchange Commission’s reversal of a decade-old policy aimed at approve several Bitcoin spot exchange-traded funds, vehicles providing investors with exposure to the price of Bitcoin through a regulated product.

Many of the biggest names on Wall Street have offered Bitcoin spot ETFs, including BlackRock, the world’s largest asset manager. But despite the widespread anticipation for their launch, the price of bitcoin fell about 15 percent in the days following the SEC approval.

The token’s recent rise to $50,000 – more than double the level it was at a year ago – follows evidence that the AND F bring new money to the market and represent an opportunity for Bitcoin to turn a long-term corner, analysts said.

“After the disappointing launch of several Bitcoin ETFs, we are now seeing continuous influx in newly issued funds, and I think we’re seeing a lot more organic demand for bitcoin as a result,” said James Butterfill, head of research at crypto investment group CoinShares.

After the first waves of entries into the new bitcoin spot ETFs and Cash outflows from Grayscale InvestmentsConverted product, asset managers are turning their attention to the long-term investment case for Bitcoin ETFs.

According to data shared by CoinShares, the newly approved Bitcoin ETFs generated approximately $3 billion in net flows, even after more than $6 billion was withdrawn from the Grayscale product since its first day of trading as an ETF.

As crypto offerings continue to penetrate the world of traditional finance, issuers are optimistic that traditional investors will eventually allocate a small percentage of their portfolios to products such as Bitcoin ETFs alongside traditional exposure to stocks and bonds.

Recommended

“I think it’s something where you’ll start to see a specific allocation to that over time with a longer track record,” said Tim Huver, managing director of the U.S. ETF services team at Brown Brothers Harriman . “I think we will see growing adoption and interest in this space.”

“We tell clients that one of the most important things is to understand the value of starting from scratch,” added Kathy Kriskey, senior alternative ETF strategist at Invesco, which partnered with Galaxy Digital to launch a Bitcoin ETF last month. Investors could start by removing 1 percent of their stock exposure and reallocating it to bitcoin, she said: “I think in conversations with analysts right now, this idea of ​​going from zero to 1 for hundred is acceptable.

The crypto industry has also been buoyed by hopes that it has survived the harshest regulatory sanctions and scandals. In November, Binance – the world’s largest exchange – paid a $4.3 billion fine to US authorities for charges related to money laundering and violating international sanctions.

Optimism for bitcoin has further increased amid expectations that central banks will cut interest rates this year, making risky assets more attractive to investors. In April, the network on which Bitcoin operates will also slow the circulation of available bitcoins, a scheduled update that the market believes will support further gains for the flagship cryptocurrency.

Recommended

However, other analysts are less convinced that Bitcoin will maintain its recent upward trajectory.

“I’m sure bitcoin [bulls] “I will say that the world is waking up to the reality of Bitcoin, but given how cloudy the Bitcoin ecosystem is, it’s hard to say who’s buying and why,” said Jim Angel, an affiliate professor at the Psaros Center for Financial Markets and Politics by Georgetown McDonough. “The price of Bitcoin will always fluctuate violently depending on how many true believers want to buy and how many skeptics want to sell,” he added.

“If you watch the discussions about the value of bitcoin, online, it’s almost all short-term technical analysis and there’s almost no argument about its fundamental value,” Angel said.

Video: Bitcoin mines could be used for energy storage | FT technology


Fuente