Bitcoin hit the $50,000 mark for the first time since the bull days of 2021. Its rise comes from a five-day stretch where it gained 13% and represents a strong recovery after a mid-January sell-off when the long-awaited spot was reached. Bitcoin exchange-traded funds (ETFs) have started trading.
During the January decline, bitcoin fell to $38,500 as it succumbed to a familiar pattern of “buy the rumor and sell the news” that has plagued previously anticipated events in the crypto space , such as the April 2021 direct listing by Coinbase and the launch of cash payments. Bitcoin futures ETF in October 2021.
One of the main reasons for the sale was the liquidation of $1.2 billion worth of shares held by the estate of the bankrupt crypto exchange FTX in one of these ETFs, the Grayscale Bitcoin Trust (GBTC).
Those sales, combined with those of other investors looking to escape the company’s relatively high 150 basis point expense ratio, softened the impact of billions of dollars flowing to rivals such as Fidelity and BlackRock. However, outflows from GBTC are slowing as offerings from BlackRock and Fidelity approach a combined $8 billion in assets under management. In total, over $3 billion in net new demand for bitcoin through these ETF products has entered the industry since these products began trading.
There could also be more bullish momentum in Bitcoin’s immediate future. Next April, it will experience its fourth “halving,” a quadrennial event that reduces the rate of issuance of new bitcoins by 50%. This process will continue until the final bitcoin is mined in 2140.