Bitcoin Surges Past $50,000 Mark for the First Time in Over Two Years

In a significant milestone, Bitcoin has surpassed the $50,000 mark for the first time in over two years. The surge in the world's largest cryptocurrency is attributed to expectations of interest rate cuts later this year and the recent regulatory approval for U.S. exchange-traded funds (ETFs) designed to track its price.

As of 12:56 p.m. EST (1756 GMT) on Monday, Bitcoin was trading at $49,899, marking a 4.96% increase for the day. This surge comes amidst a 16.3% year-to-date rise, reaching its highest point since December 27, 2021. Despite oscillating around the $50,000 level, the cryptocurrency's recent performance showcases its resilience.

Antoni Trenchev, co-founder of crypto lending platform Nexo, highlighted the significance of the $50,000 level, especially after the launch of spot ETFs last month. Trenchev noted, "$50,000 is a significant milestone for bitcoin after the launch of spot ETFs last month not only failed to elicit a move above this key psychological level but led to a 20% sell-off."

Crypto-related stocks also experienced positive momentum, with Coinbase (COIN.O) rising by 4.9%, and crypto miners Riot Platforms (RIOT.O) and Marathon Digital (MARA.O) seeing increases of 10.8% and 11.9%, respectively. Shares of MicroStrategy (MSTR.O), a prominent bitcoin buyer, surged by 10.2%.

The second-largest cryptocurrency, ether, witnessed a 4.12% increase, reaching $2,607.57.

Global stock indexes also saw upward movements as traders speculated on the potential timing of interest rate cuts by the U.S. Federal Reserve. Market analysts are pointing to May as a likely start date for rate cuts in 2024.

The driving force behind Bitcoin's recent price surge is attributed to the increased inflow into BTC spot ETFs, according to Matteo Greco, a research analyst at fintech investment firm Fineqia International. The approval of the first U.S. spot bitcoin ETFs on January 10 marked a watershed moment for the cryptocurrency and the broader crypto industry.

Greco highlighted the slowing outflows from Grayscale Investment's Grayscale Bitcoin Trust (GBTC.P), which recently received approval from the U.S. Securities and Exchange Commission (SEC) to convert to an ETF. Meanwhile, BTC Spot ETFs saw a notable net inflow of about $1.2 billion during the same period.

Analysts project gradual growth in ETF inflows, with estimates from Bernstein suggesting a buildup to over $10 billion in 2024. Standard Chartered analysts anticipate even larger figures, predicting the possibility of drawing $50 billion to $100 billion this year alone.

Investors are also closely monitoring seven pending applications for ETFs tied to the spot price of ether, with the SEC expected to deliver final decisions by May. Additionally, anticipation surrounds the upcoming bitcoin "halving" in April, a process designed to slow the release of bitcoin and historically associated with market rallies.

Ben Laidler, global markets strategist at eToro, emphasized the significance of the fourth bitcoin halving, a potential Fed interest rate cut, and the approval of Ethereum spot ETFs. These factors are deemed crucial for the cryptocurrency market, characterized as the smallest, youngest, and most retail-dominated asset class.