Bitcoin Breaks $50,000 Barrier in Bull Market Fueled by ETFs

Bitcoin (BTC) has reached a significant milestone, breaking out above $50,000 for the first time in over two years. This marks a major turning point for the cryptocurrency, as it enters the Fear of Missing Out (FOMO) stage of the bull market that began in January 2023.

The launch of spot ETFs in January initially caused a stumble in the market, with the price of bitcoin tumbling to as low as $38,500 just days after the ETFs opened for business. However, investor attention quickly shifted to the new ETFs, which took in billions of dollars in their first weeks of trade. Meanwhile, billions of dollars were leaving the high-fee Grayscale Bitcoin Trust (GBTC).

In recent weeks, there has been a noticeable slowdown in outflows from GBTC, while significant inflows have continued into the new ETFs. On February 8, Grayscale shed only 1,850 bitcoin, while the other nine ETFs added nearly 11,000 tokens to their funds. The following day, Grayscale lost 2,252 coins, while the other nine ETFs added over 13,000. It is worth noting that the daily supply of newly mined bitcoin is around 900, soon to decline to 450 per day after the Bitcoin halving in April.

The price of bitcoin reached its peak at around $69,000 in November 2021. However, 2022 was a disastrous year for the cryptocurrency, with the implosion of the Terra ecosystem and the disintegration of crypto exchange FTX and its founder Sam Bankman-Fried in November 2022. Bitcoin closed 2022 at just above $16,000, down approximately 75% from its all-time high. Other crypto tokens also suffered significant losses during this period, and the industry experienced widespread layoffs and shop closings.

While 2023 will be remembered as a major bull market period for crypto, the price action for bitcoin was relatively lackluster throughout much of the year. By October 1, bitcoin was trading at just $27,000, representing a recovery of more than 65% for the year, but still far from its previous highs.

However, the final quarter of 2023 brought growing confidence that the Securities and Exchange Commission (SEC) would finally approve spot bitcoin ETFs in early 2024. This sentiment drove the price of bitcoin up by nearly 60% in the last three months of the year, closing above $42,000.

The recent breakthrough of bitcoin above $50,000 on Coinbase is a significant development for the cryptocurrency market. It signals renewed investor interest and confidence in bitcoin’s potential for further growth. As the bull market continues, all eyes will be on the SEC’s decision regarding spot bitcoin ETFs, which could have a profound impact on the future trajectory of bitcoin and the broader crypto industry.

Source: [CoinDesk](