Bitcoin prices surged to over $50,000 on Monday, a month after the launch of bitcoin spot exchange-traded funds (ETFs) in the US on 11 January. This surge marks the highest price for the cryptocurrency since December 2021, and analysts attribute the jump to an increase in inflows to the cryptocurrency.
The recent surge in the price of bitcoin can be traced back to the approval of the launch of bitcoin spot ETFs by the US Securities and Exchange Commission (SEC) in January. This approval led to an influx of institutional investors and higher inflows into bitcoin, which in turn contributed to the latest rally.
Another factor driving the surge in bitcoin prices is the upcoming halving of rewards, which is expected to take place in April-May. This will further restrict the supply of bitcoin and increase its scarcity, pushing its value even higher. Historically, the price of bitcoin has surged after the previous halving events, indicating that this factor is contributing to the current rally as well.
The anticipation of cues from the US Federal Reserve on possible rate cuts is also contributing to the optimism surrounding bitcoin. If the Federal Reserve signals that rate cuts may begin as early as June 2024, investors are likely to increase their allocation to risky assets such as cryptocurrency, triggering another rally in bitcoin prices.
These developments have instilled optimism in the cryptocurrency market, with many investors seeing bitcoin as a potential asset for investment. With the next meeting of the Federal Open Market Committee scheduled for 19-20 March, further cues from the Federal Reserve could have a significant impact on the future price of bitcoin and other crypto assets.
Overall, the surge in bitcoin prices can be attributed to a combination of factors, including higher inflows, the imminent halving of rewards, and the expectation of rate cuts, all of which are contributing to the renewed interest in the cryptocurrency.
