Bitcoin spiked above $50,000 Tuesday for the first time in more than two years as investors grow optimistic that US approval of broader trading in the unit will ramp up demand.
In recent months, the cryptocurrency market has experienced significant growth, driven by anticipation that US legislators would authorize the establishment of exchange-traded funds (ETFs) designed to mirror cryptocurrency prices, enabling public investment in crypto assets without direct acquisition.
Although Bitcoin initially experienced a decline following Washington’s approval last month, it has since surged by approximately 25% since January 22nd. Bloomberg data indicates that this surge propelled Bitcoin to reach highs of up to $50,328, marking its highest value since late 2021.
Observers maintain an optimistic outlook, noting that the enthusiasm of buyers attracts more participants, thereby driving prices even higher.
“Enthusiast buyers bring in more enthusiast buyers pushing prices further up,” Fadi Aboualfa, of Copper Technologies, said.
“The cryptocurrency has momentum on the back of several green weeks and has a large chance of going up further when markets see weekly movements upwards of 10 percent (as we saw last week).”
As of 0330 GMT on Tuesday, Bitcoin experienced a minor decline, settling at $49,950. Despite this, the cryptocurrency still lags significantly behind its peak value of nearly $69,000 in 2020.
However, the recent rally signals a resurgence following a string of prominent scandals and collapses that shook the cryptocurrency sector.
FTX, the world’s second-biggest crypto exchange, dramatically went under last year, and its boss Sam Bankman-Fried faces up to 110 years in prison for what prosecutors described as “one of the biggest financial frauds in American history”.
In November, Changpeng “CZ” Zhao resigned as CEO of Binance, the largest cryptocurrency exchange globally, following both him and the company pleading guilty to extensive money laundering offenses.
Additionally, Bitcoin has received a boost from expectations that the US Federal Reserve will begin reducing interest rates this year as inflation pressures ease.
Moreover, the cryptocurrency’s value has been influenced by anticipation of a supply shortage next year due to an event known as “halving.”
Bitcoin is generated, or “mined,” as a reward when sophisticated computers successfully solve intricate problems.
However, the supply of Bitcoin is finite, and every four years, the reward is halved. The upcoming “halving” is scheduled for April.