After reaching the much anticipated $50,000 threshold for the first time in more than two years, Bitcoin stabilized, hovering just below it. It marked an amazing recovery from the cryptocurrency scandals and wipeouts that had raised concerns about the industry’s sustainability.
As of 10:52 a.m. on Tuesday in Singapore, the oldest cryptocurrency was trading for $49,960, having risen as high as $50,379 earlier. The token’s value fell by 64% in 2022, however it has now tripled since the start of the year. Roughly $19,000 separates Bitcoin from its all-time high, set in November 2021.
One of the key attractions for speculators has always been the wild surges in prices that have been witnessed since the launch of Bitcoin more than ten years ago. Originally marketed as competition for the established financial system, the most recent surge has been propelled by hope that increased public acceptance will come from the US government’s licensing of spot Bitcoin exchange-traded funds last month.
Miller Tabak & Co. chief market strategist Matt Maley said, “There is a lot of talk about inflow of money into this asset. I’d also note that the momentum players are getting excited as well.”
The allure of risky assets is being grown by forecasts of a looser monetary policy, which is driving cryptocurrency prices upward. Digital assets have also become more risk-tolerant, according to DeFi analyst at Cumberland Labs, Chris Newhouse.
On Monday, shares of businesses involved in cryptocurrencies surged as well. MicroStrategy Inc., a Bitcoin proxy, rose 11%, Coinbase Global Inc., a trading platform, was up 3.8%, and Marathon Digital Holdings Inc., a miner, grew 14.2%.
The enthusiasm extended to Asian equities involved with digital assets, encompassing developments in businesses like South Korea’s Woori Technology Investment Co. and Japan’s Monex Group.
On January 11, nine US-based spot Bitcoin exchange-traded funds debuted, and the over decade-old Grayscale Bitcoin Trust became an ETF on the same day. The token’s investor base is expected to surge as a result of the new ETF accessibility. About $9 billion has been drawn to the new funds thus far, although the Grayscale fund has been losing money since its conversion, with almost $6 billion withdrawn.
Susan Thompson, head of SPDR Americas Distribution at State Street Global Advisors, stated on Bloomberg Television that “We are a little ways away from there being broader acceptance. Most advisers we talk with are taking a wait-and-see approach.”
In order to evaluate the benefits of diversification, financial counselors must examine an asset’s movements over time. However, because Bitcoin is a token with a short lifespan, Thompson noted it is difficult to forecast its influence.
