The price of Bitcoin reached $50,000 for the first time since December 2021, supported by the launch of traded funds that invest directly in the cryptocurrency on the American Stock Exchange.
Nine new Bitcoin funds began trading in the United States on January 11, attracting more than $9 billion in investments so far, according to Bloomberg.
Two funds affiliated with BlackRock and Fidelity Investments rank as the most successful ETFs ever launched, based on the total assets the funds attracted a month after launching on the market, Bloomberg Intelligence analysts Eric Balchunas and James Seyfart wrote in a note.
Carolyn Bowler, CEO of the cryptocurrency platform BTC Markets Pty, said on Bloomberg TV that there are indications of increased movement of institutional funds into this asset class.
Factors supporting Bitcoin price
The Grayscale Bitcoin Trust, which was more than a decade old, was converted into an exchange-traded fund that invests directly in the cryptocurrency on the same day the new funds were launched. The exit of money from the Gray Scale Fund has slowed after losing more than $6 billion. Overall, net investments in all 10 funds amounted to about $2.8 billion.
The hype around ETFs sparked a Bitcoin revival last year, with its price briefly topping $49,000 on the day it began trading. A multi-day sell-off ensued, resulting in $10,000 in losses, as investors took profits and waited to see how well the ETFs fared. The subsequent recovery brought the $50,000 level to the fore, a level last seen in 2021.
The cryptocurrency market is witnessing optimism regarding the so-called Bitcoin halving scheduled for April, which takes place every 4 years. The halving process reduces the amount of Bitcoin received by miners, the operators of powerful computers that verify transactions on the blockchain. This event is often seen as a support for prices based on historical precedent.
Aside from ETF flows, sentiment toward Bitcoin is typically positive during the Lunar New Year holiday currently underway in Asia, Fundstrat Global Advisors said in a note.
Bitcoin is still about $20,000 below the record level it recorded in 2021, during a pandemic-era rise supported by abundant liquidity in the markets.
