Bitcoin surged past the crucial $50,000 resistance level earlier today around 11:00 AM EST, marking its first breach of this milestone since December 2021.
Despite this significant achievement for the crypto market, the upward momentum of the leading cryptocurrency has been tempered by selling pressure from major exchanges like Binance and Coinbase.
This rally in Bitcoin’s price comes at an opportune moment, following the approval of 11 spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission roughly a month ago, albeit amidst some chaos.
To put this into perspective, just last year, Bitcoin was trading at less than half of its current value. As of the start of 2023, BTC was hovering around $22,000, with the crypto industry still recovering from the fallout of the 2022 crash.
According to CoinShares data, investment products in the digital asset category witnessed inflows of $1.1 billion, bringing the year-to-date inflows to $2.7 billion, with Bitcoin representing over 98% of these inflows.
The recent surge in Bitcoin’s price reflects a growing confidence in crypto markets. However, this sentiment was challenged about two weeks after the ETFs were approved when Grayscale, one of the largest cryptocurrency asset managers, began selling Bitcoin to Coinbase, moving over $2.2 billion during that period. This selling pressure temporarily suppressed Bitcoin’s price, although it has since subsided, allowing prices to stabilize and resume their upward trajectory.
Meanwhile, ETF products like BlackRock’s IBIT and Fidelity’s FBTC witnessed their highest opening-hour trading volumes since January 22, with their share prices rising by 5% as markets opened earlier today.
The rapid increase in institutional investment, fueled by ETFs and other developments in the institutional crypto sector, is seen as the primary catalyst for Bitcoin’s newfound momentum. Additionally, the tech industry’s recovery from the challenges posed by COVID-19, including issues like silicon shortages and supply chain disruptions, has also contributed to Bitcoin’s upward movement. Notably, Bitcoin has broken its correlation with the Nasdaq-100 index for the first time in four years.
Another factor driving Bitcoin’s recent price performance is the upcoming “halving” event expected in April this year. This event will further reduce Bitcoin’s supply, reinforcing its status as a hedge against inflation and solidifying its position as a deflationary asset.
While Bitcoin experienced significant gains in 2021, reaching an all-time high price above $69,000, its trajectory going forward relies heavily on maintaining positive momentum and attracting institutional capital.
At the time of writing, Bitcoin is trading at $50,220 according to CoinGecko. However, if interest wanes, the price could easily reverse course. Nonetheless, reclaiming the $50,000 level represents a notable comeback for the leading cryptocurrency.
