Bitcoin $50k Level: Breaking News and Analysis

Bitcoin $50k Level: Breaking News and Analysis 

Bitcoin surged past the $50,000 mark, reaching a level not seen in over two years. The world's largest cryptocurrency benefited from anticipations of upcoming interest rate cuts later in the year and recent regulatory approval for U.S. exchange-traded funds (ETFs) tracking its price.

This year alone, Bitcoin has seen a remarkable 16.3% rise, hitting its highest point since December 27, 2021, on Monday. By 12:56 p.m. EST (1756 GMT), Bitcoin was up 4.96% at $49,899, hovering around the $50,000 level.

Driving Factors: Interest Rate Expectations and ETF Approval

Antoni Trenchev, co-founder of the crypto lending platform Nexo, noted, "$50,000 is a significant milestone for Bitcoin. After the launch of spot ETFs last month, which initially failed to push above this key psychological level and resulted in a 20% sell-off, this achievement is noteworthy."

The positive momentum extended to crypto-related stocks on Monday. Coinbase saw a 4.9% increase, while crypto miners Riot Platforms and Marathon Digital rose by 10.8% and 11.9%, respectively. Shares of MicroStrategy, a notable Bitcoin buyer, also surged by 10.2%.

Ether, the second-largest cryptocurrency, experienced a 4.12% increase, reaching $2,607.57.

Global stock indexes showed slight gains as traders sought hints on potential interest rate cuts by the U.S. Federal Reserve. Market expectations and analysts both point to May as a possible starting point for rate cuts this year.

The approval of the first U.S. spot Bitcoin ETFs by the U.S. securities regulator on January 10 marked a significant development. This approval had been a goal for the cryptocurrency industry for more than a decade. Notably, outflows from Grayscale Investment's Grayscale Bitcoin Trust (GBTC) have started to slow down, following SEC approval in January to convert it into an ETF.

Analysts predict gradual growth in flows into the new ETFs, estimating them to surpass $10 billion by 2024. Some analysts are more bullish, suggesting these products could attract $50 billion to $100 billion in 2022 alone.

Attention is also on seven pending applications for ETFs tied to the spot price of Ether, with the SEC expected to make decisions on some by May. Investors are eagerly awaiting the next Bitcoin "halving" expected in April, a process designed to slow the release of Bitcoin, with supply capped at 21 million tokens. The market has historically reacted positively to previous halving events, including the most recent one in 2020.

Ben Laidler, global markets strategist at eToro, commented on the significance of these events for the crypto market, highlighting the upcoming Bitcoin halving, a potential Fed interest rate cut, and the potential approval of an Ethereum spot ETF. He emphasized their importance for what is still the smallest, youngest, and most retail-dominated asset class.