KA-BOOMING BITCOIN
Crypto on the rebound as price zooms past $50K
Bitcoin exploded past the $50,000 threshold for the first time in more than two years Monday — the latest sign of a massive rebound for the scandal-rocked crypto sector.
The pricey cryptocurrency rose nearly 5% in late Monday trading and hovered right at the $50,000 milestone. Bitcoin is up more than 16% since the start of the year.
Crypto fanatics were bolstered by expectations that the Federal Reserve will soon loosen market conditions by cutting interest rates. The market projects that the Fed’s first rate cut in years could occur as soon as May.
The Securities and Exchange Commission’s approval last month of spot bitcoin exchange traded funds — which allow investors to acquire stakes in funds that own bitcoin — also appears to be stoking renewed optimism among investors.
Proponents say ETFs will boost demand by making it easier for ordinary investors to access the crypto market. Bitcoin briefly dipped after the approval, but trading has been robust in the days since.
Traders are hungry
“I think that the approval of the spot ETFs was a ‘buy the rumor sell the news’ event, and after some profit-taking, everyone in the market is pulling in the same direction,” said Christopher Alexander, chief analytics officer at Pioneer Development Group.
Another key factor is a looming bitcoin “halving,” a planned event that occurs once every four years and reduces the amount of digital currency people receive for “mining” by half. Historically, bitcoin prices have surged after halving — and the next one is due to happen in mid-April.
“This has always occurred around a bull run, and while it may not be the direct cause of an uptick in BTC price, it is definitely a psychological event that has some market impact,” Alexander added.
Bitcoin’s “halvings” are meant to ensure the currency’s scarcity over time. While the events are often compared to corporate stock splits, existing bitcoin stashes aren’t affected other than by resulting price changes.
Bitcoin went through a major slump shortly after hitting its alltime high price of $69,000 in November 2021. The leading crypto token hadn’t traded above $50,000 since December of that year.
The industry was rocked by a socalled crypto winter in 2022, with bitcoin dropping by a whopping 64% as a rise in interest rates led some investors to dump their crypto holdings in favor of less risky options.
The trouble was compounded by stunning implosions of the TerraUSD stablecoin and its interlinked sister cryptocurrency Luna.
The most significant blow came in November 2022 with the collapse of convicted fraudster Sam Bankman-Fried’s FTX empire. BankmanFried is awaiting sentencing after being convicted late last year of stealing $10 billion from his customers.
Traders have regained their appetite for the risky assets despite warnings from SEC Chairman Gary Gensler, who has remained critical of cryptocurrencies as an investment vehicle despite his agency’s approval of the spot ETFs.
“Investors should be aware that the underlying asset is a highly speculative, volatile asset,” Gensler told CNBC last month.