Bitcoin Hits $50K - What's Next? Bull or Bust?
It happened.
On Tue, 13 Feb 2024 Bitcoin broke thru the $50,000 resistant level, after scaling the closely watched level for the first time in over 2 years.
It is a remarkable comeback from the crypto scandals and wipeouts that had cast doubt on the industry’s viability.
The largest digital asset was trading at $50,010.03 as of 2:32pm. Singapore time, having earlier risen as high as $50,379. (see below)
The token has tripled in value since the start of 2023 following a -64% plunge in 2022.
It remains roughly $19,000 below the all-time high attained back in November 2021.
Wild price fluctuations witnessed since the introduction of Bitcoin more than a decade ago have been one of the main attractions to speculators.
While originally promoted as an alternative to the traditional financial system, the latest rally has been driven by optimism that last month’s US approval of spot Bitcoin ETFs funds is leading to greater mainstream acceptance.
Miller Tabak & Co., chief market strategist — Matt Maley noticed and has said the followings:
There is a lot of talk about inflow of money into Bitcoin.
The momentum players are getting excited as well.
Risk Appetite
The resurgence in crypto prices comes as expectations of looser monetary policy burnish the allure of riskier assets.
Says Cumberland Labs, DeFi analyst, Chris Newhouse — “The appetite for risk has trickled over into digital assets as well”.
Shares of crypto-related companies also gained on Mon, 12 Feb 2024:
Bitcoin proxy $MicroStrategy(MSTR)$ rising +11%.
Trading platform $Coinbase Global, Inc.(COIN)$. increasing +3.8%.
Miner $Marathon Digital Holdings Inc(MARA)$ jumping +14.2%.
The positive sentiment spread to Asian stocks related to digital assets, including advances in companies such as Japan’s Monex Group and South Korea’s Woori Technology Investment Co.
Bitcoin has recovered all its losses since the May 2022 implosion of stablecoin TerraUSD, that has set in motion a wave of failures that ultimately brought down Sam Bankman-Fried’s FTX exchange in November 2022.
By the time FTX went down, the crypto market was already months into a rout that also claimed hedge fund Three Arrows Capital and lender Celsius Network.
It was the fall of FTX, once one of the top crypto exchanges by trading volume, was even more damaging, with token prices stagnating as liquidity dried up.
With (a) Bankman-Fried convicted of fraud, and (b) Binance exchange’s co-founder Changpeng Zhao awaiting sentencing for US sanctions violations and failure to implement anti-money laundering (AML)policies, crypto prices have moved higher as analysts see fewer looming risks to the industry.
ETF Inflows
On 11 Jan 2024, 9 US spot Bitcoin ETFs made its debut, a day after SEC’s approved the ETF launch.
While the 11 years old Grayscale Bitcoin Trust converted into an ETF the same day.
Accessibility of ETFs promises has helped to widen the investor base for the token.
To date, the 11 “new” ETFs have attracted about $9 Billion, while > $6 Billion outflow from the Grayscale fund since its conversion seems to be losing steam. (see below)
A recent interview on Bloomberg Television with Susan Thompson, head of SPDR Americas Distribution at State Street Global Advisors, highlighted the current state of wider Bitcoin acceptance.
Thompson stated that:
"Broader acceptance is still a ways off".
"Majority of financial advisors they interact with are adopting a wait-and-see approach”.
Financial advisers need to examine an asset’s correlations over time to assess potential diversification benefits, whereas Bitcoin’s impact is hard to predict as the token is relatively short-lived, Thompson said.
Financial advisors (FAs)emphasize examining an asset's historical correlations to understand its potential for diversification.
However, FAs find predicting Bitcoin's impact challenging due to its relatively short existence.
Bitcoin Halving.
Optimism about the quadrennial Bitcoin halving due on 20 Apr 2024, is also filtering across crypto.
Halving cuts the quantity of Bitcoin miners receive for operating the powerful mining machines that verify transactions on the blockchain.
The event is often viewed a support for prices based on historical precedent.
Interesting, on Monday, crypto traders betting on price drops witnessed the largest liquidation event since 10 Jan 2024 (the day US spot Bitcoin ETFs received regulatory approval).
Coinglass data revealed that approximately $135 Million worth of short positions were liquidated.
This signifies a significant shift in market sentiment, potentially fueled by the recent ETF approval.
My viewpoints : (mine & mine only)
After sieving through what I have drafted, I think there is more upside to Bitcoin, in the short to medium term.
Bitcoin price is $50,172.60 as of 6:30pm, Singapore time (GMT +8 hours), an increase of +$162 since morning.
It is trending up “slowly” but surely.
Reaching $50,000 could be seen as a sign of:
Increased investor confidence: Breaking barriers like $50,000 can attract new entrants, creating a positive feedback loop.
Growing institutional adoption: Spot Bitcoin ETFs might be bringing in institutional money, adding stability and legitimacy.
Market sentiment: The market seems optimistic about Bitcoin's future potential, driving the price up.
Regardless of SEC opinion on Spot Bitcoin ETFs, I think its launch has contributed positively to Bitcoin’s ascension:
Providing easier access for investors: ETFs offer a familiar structure for traditional investors to enter the crypto market.
Increasing institutional investment: Large institutions might use ETFs to gain exposure to Bitcoin.
Still game to take a risk on this extremely volatile digital “asset” or its fringe-related stocks?
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Great ariticle, would you like to share it?