(Bloomberg) — Bitcoin hovers around $50,000 after briefly gaining attention for the first time in more than two years, marking a remarkable comeback from crypto scandals and sweeps that cast doubt on the industry's viability. It became.
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The largest digital asset rose to $50,328 in the United States on Monday and was trading at $49,980 in Singapore as of 7:40 a.m. Tuesday. After plummeting 64% in 2022, its value has tripled since the beginning of last year. Bitcoin remains below the all-time high of around $69,000 reached in November 2021.
The wild price fluctuations seen since Bitcoin's introduction over a decade ago have long been one of its major attractions for speculators. Originally promoted as an alternative to the traditional financial system, the recent rally has been driven by optimism that the U.S. approval of spot Bitcoin exchange-traded funds last month is leading to mainstream acceptance. There is.
Read more: What are these new Bitcoin ETFs and how do they work?
“There's a lot of talk about inflows into this asset, and it's interesting to note that the momentum players are excited as well,” said Matt Maley, chief market strategist at Miller Tabak.
risk appetite
The resurgence in crypto prices comes as expectations for easing monetary policy make riskier assets more attractive. “Risk appetite is trickling down to digital assets,” said Chris Newhouse, DeFi analyst at Cumberland Institute.
Shares of crypto-related companies also rose on Monday, with Bitcoin agency MicroStrategy up 11%, trading platform Coinbase Global up 3.8% and miner Marathon Digital Holdings up 14.2%. Rose. The positive sentiment may also spread to Asian stocks related to digital assets.
Bitcoin has recovered all its losses since the implosion of stablecoin TerraUSD in May 2022. The debacle set in motion a series of failures that ultimately contributed to the shutdown of Sam Bankman Fried's FTX exchange in November 2022.
At the time of FTX's decline, the cryptocurrency market had already begun a months-long crash that had also affected hedge fund Three Arrows Capital and financier Celsius Network. However, the decline of FTX, which was once one of the top cryptocurrency exchanges in terms of trading volume, caused even more damage as token prices stagnated due to a lack of liquidity.
Currently, with Bankman Freed convicted of fraud and Binance exchange co-founder Chao Changpeng awaiting sentencing for violating US sanctions and failing to comply with anti-money laundering policies, analysts Cryptocurrency prices are rising as investors see the industry's immediate risks decreasing.
ETF inflow
Nine U.S. spot Bitcoin exchange-traded funds debuted on January 11, with the more than 10-year-old Grayscale Bitcoin Trust converting to an ETF on the same day. The ease of access to ETFs is expected to widen the token investor base. The new fund has attracted about $9 billion so far, but more than $6 billion has flown out of the Grayscale fund since its conversion, and it appears to be losing momentum.
Fadi Abualfa, head of research at cryptocurrency management company Copper Technologies, said, “Enthusiastic buyers will attract even more enthusiastic buyers, and prices will rise further.'' “There is momentum against this background, and there is a strong possibility that it will rise further.” When the market moves more than 10% weekly (as we saw last week). ”
Optimism regarding the once-in-four-year Bitcoin halving, scheduled for April, is also widespread across cryptocurrencies. The halving reduces the amount of Bitcoin that miners receive to operate powerful computers that verify transactions on the blockchain. This event is often seen as supporting prices based on historical precedent.
Apart from ETF inflows, sentiment towards Bitcoin during the current Lunar New Year holiday in Asia is “generally positive,” Fundstrat Global Advisors said in a note.
—With assistance from Isabel Lee.
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