Bitcoin has continued to rise in price for seven days in a row and by this evening it had crossed the psychologically important mark of $50 thousand per token. It hasn’t cost that much since the end of 2021. The rise comes amid increasing investor interest in recently launched Bitcoin spot ETFs.
Bitcoin reached a peak value of $50,314 this evening, but by the time this note was published, the price of the main cryptocurrency had dropped slightly, to approximately $49,902, according to CoinDesk.
While Bitcoin ETFs have raked in billions of dollars in their first weeks of trading since launching on January 11, investors’ attention has been focused on the outflow of billions of dollars from the high-yield Grayscale Bitcoin Trust (GBTC). Against this backdrop, the price of Bitcoin fell to $38,500 just a few days after the ETF launched. However, outflows from GBTC have slowed over the past couple of weeks, while strong inflows into new funds have continued.
In addition, the growth of Bitcoin is explained by the fact that it will soon become more difficult to mine. Around April, Bitcoin halving will occur – this is a mechanism to protect cryptocurrency from inflation, which implies a reduction in the reward for mining a block by half.
Let us remind you that Bitcoin reached its historical maximum of $69 thousand in November 2021. But 2022 was a difficult year for the cryptocurrency market amid the collapse of the Terra ecosystem, the scandal surrounding the FTX cryptocurrency exchange and its founder Sam Bankman-Fried, as well as a number of other high-profile events in the crypto industry. Bitcoin ended 2022 just above $16,000, 75% below its all-time high. Many other cryptocurrency assets have suffered even worse declines.
2023 will be remembered as a period of significant growth in the cryptocurrency market, but Bitcoin price performance was rather sluggish for most of the year. Back on October 1, Bitcoin was trading at just $27,000, up 65% since the start of 2023, but that was a relatively small recovery considering how high Bitcoin is now.