Bitcoin Breaks $50,000 Barrier After Two Years of Slump
Bitcoin, the leading cryptocurrency, surged to a two-year high of $50,000 on Friday, Feb. 12, 2024, amid growing demand from institutional investors and retail traders.
The digital asset rallied 3% from an intraday low of $47,745 to reach the milestone, marking a 17.2% increase over the past week. The last time Bitcoin traded above $50,000 was on Dec. 28, 2021, when it hit a record high of $50,720 before plunging to a low of $15,522 on Nov. 9, 2022, following a major hack on the FTX exchange that resulted in the loss of over $1 billion worth of crypto assets.
The recovery of Bitcoin has been fueled by the rising popularity of spot Bitcoin exchange-traded funds (ETFs), which allow investors to gain exposure to the cryptocurrency without having to buy or store it directly. According to a report by CoinShares, a digital asset investment firm, spot Bitcoin ETFs in the US saw a net inflow of $1.1 billion last week, bringing the total inflow since their launch on Jan. 11, 2024, to $2.8 billion. The report also noted that the outflows from the Grayscale Bitcoin Trust, the largest crypto asset manager, have slowed down significantly, indicating a shift in investor preference from trust-based products to ETFs.
The growing adoption of spot Bitcoin ETFs has boosted the total assets under management (AUM) of the crypto sector to $59 billion, the highest level since early 2022. The increase in AUM reflects the growing confidence and interest in the crypto space, especially among institutional investors who seek to diversify their portfolios and hedge against inflation and currency devaluation.
However, the surge in Bitcoin price also comes with increased volatility and risk, as evidenced by the spike in crypto market liquidations on Friday. According to data from Coinglass, a crypto analytics platform, over $152 million worth of crypto positions were liquidated in the past 24 hours, with the majority being long positions on Bitcoin. The liquidations were triggered by sudden price movements and high leverage, which amplify the gains and losses of traders.
As Bitcoin continues to break new grounds, analysts and experts are divided on its future prospects. Some believe that Bitcoin is on its way to challenge its all-time high of $69,000 and possibly reach new heights, while others warn that the rally is unsustainable and driven by speculation and hype. Regardless of the outcome, Bitcoin has once again proven its resilience and relevance in the fast-changing and dynamic world of finance.
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