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Bitcoin’s price hit $50,000 on Monday for the first time since 2021, underscoring the abrupt 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 20% since the start of the year, largely thanks to the U.S. Securities and Exchange Commission’s reversal of a decade-old policy of approving multiple funds spot exchange-traded vehicles that provide investors with exposure to the price of bitcoin. via 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 widespread anticipation for their launch, the price of Bitcoin fell by around 15% in the days following the SEC’s approval.
The token’s recent rise to $50,000 – more than double the level it was at a year ago – follows evidence that ETFs are bringing new money to the market and represent an opportunity for Bitcoin to reaching a long-term milestone, analysts said.
“After the disappointing launch of several Bitcoin ETFs, we are now seeing continued inflows into newly issued funds, and I believe we are seeing much more organic demand for Bitcoin as a result,” said James Butterfill, head of research at Crypto Investment Group. CoinShares.
After the first waves of inflows into new spot Bitcoin ETFs and exits from Grayscale Investments’ converted 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the newly approved Bitcoin ETFs generated approximately $3 billion in net flows, even after more than $6 billion was withdrawn from the Grayscale product since its first day of trading as an ETF.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.
“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.”
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 over charges related to money laundering and violating international sanctions.
Optimism over 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.
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.