On Monday, Bitcoin exploded above the $50,000 threshold for the first time in more than two years. This is the latest sign of a major recovery for the scandal-rocked crypto sector.
The expensive cryptocurrency rose nearly 5% in afternoon trading on Monday, hovering around the $50,000 level after surging past a milestone. Bitcoin is up more than 16% since the beginning of the year.
Cryptocurrency enthusiasts were supported by expectations that the US Federal Reserve (Fed) will ease market conditions by cutting interest rates soon. Markets are predicting that the Federal Reserve could cut interest rates for the first time in years as early as May.
The SEC’s approval last month of a spot Bitcoin ETF that allows investors to buy shares in funds that hold Bitcoin also appears to be sparking new optimism among investors.
“There’s a lot of talk about inflows into this asset,” said Matt Maley, chief market strategist at Miller Tabak & Company. told Bloomberg. “I would also like to note that the momentum players are also excited.”
Bitcoin crashed shortly after hitting an all-time high of $69,000 in November 2021. No major crypto token had traded above $50,000 since December of the same year.
In 2022, the industry was rocked by the so-called “crypto winter,” with Bitcoin dropping a whopping 64% as rising interest rates caused some investors to dump their crypto holdings in favor of lower-risk options.
The problem was further exacerbated by the surprising implosion 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 Freed’s FTX empire. Banker Mann Fried is awaiting sentencing for stealing $10 billion from his customers late last year.
Despite warnings from SEC Chairman Gary Gensler, traders are regaining appetite for risk assets. Gensler remains critical of cryptocurrencies as an investment vehicle, despite the agency’s approval of spot ETFs.
“Investors should be aware that the underlying assets are highly speculative and volatile assets,” Gensler told CNBC last month. “Some of its use cases actually include illegal activities such as money laundering, sanctions, and ransomware.”
with post wire
