Bitcoin Price has soared above the $50,000 threshold on Monday for the first time since 2021, showcasing a notable shift in market sentiment and investor appetite. This surge, marking a more than 15% gain since the beginning of the year, is largely attributed to the US Securities and Exchange Commission’s (SEC) decision to greenlight several spot Bitcoin exchange-traded funds (ETFs). These ETFs, offered by major Wall Street players like BlackRock, have been eagerly anticipated and are viewed as a gateway for institutional and mainstream investors to gain exposure to the cryptocurrency.
The SEC’s reversal of a decade-old policy to approve spot Bitcoin ETFs has significantly impacted the market. Despite a brief dip in Bitcoin price immediately following the approval, the cryptocurrency has rebounded, surpassing $50,000. This level of growth represents more than double its value from a year ago.
Analysts believe that the approval of Bitcoin ETFs is attracting new money into the market, presenting a potential turning point for the cryptocurrency’s long-term trajectory. James Butterfill, Head of Research at crypto investment group CoinShares, notes, “Following a disappointing launch of several Bitcoin ETFs, we’re now seeing continued inflows into newly issued funds, and I think we’re seeing much more organic demand for Bitcoin as a result.”
Data from CoinShares indicates that newly approved Bitcoin ETFs have attracted around $3 billion in net flows, even as over $6 billion was withdrawn from Grayscale Investments’ converted product after it transitioned to an ETF. As cryptocurrency offerings become more integrated into traditional finance, issuers remain optimistic that mainstream investors will gradually allocate a portion of their portfolios to Bitcoin ETFs, alongside traditional investments in stocks and bonds.
Tim Huver, Managing Director at Brown Brothers Harriman, anticipates increasing adoption and interest in the space over time. Kathy Kriskey, Senior Alternatives ETF Strategist at Invesco, suggests that investors could start by allocating a modest percentage of their portfolios to Bitcoin, such as 1%, as a palatable entry into the cryptocurrency market.
Despite the positive momentum and growing acceptance of Bitcoin in financial markets, some analysts remain cautious. Jim Angel, Faculty Affiliate at Georgetown McDonough’s Psaros Center for Financial Markets and Policy, highlights the nebulous nature of the Bitcoin ecosystem and the inherent volatility driven by both believers and skeptics. While optimism prevails, ongoing scrutiny and skepticism underscore the complex landscape that Bitcoin navigates in its journey towards mainstream acceptance and sustained value.