Bitcoin reaches its highest level since 2021… How the most famous cryptocurrency is getting back on track

Cautious optimism. Bitcoin processors know all too well how the value of their cryptocurrency has fluctuated in recent years, sometimes reaching peaks and then suddenly collapsing… It is therefore not without reason, but also with a smile, that they saw Bitcoin surpass the $50,000 mark this Monday USA. for the first time in more than two years.

A revival of form that has its origins in several economic factors, but which also remains to be confirmed over time. Explanations.

12 months of impressive growth

Around 1730 GMT (1830 Paris time), the price of Bitcoin rose 5.4% to $50,145.31 after peaking earlier in the session at $50,327.56, its highest since December 2021. This is confirmation for the most popular cryptocurrencies a thunderous start to the year: almost 18% since the beginning of the year, but above all the last twelve impressive increases: its price has actually increased by more than 200% since January 2023!

How can we dream of a return to Bitcoin’s peak value when we’re targeting November 2021’s all-time high of $69,000? If cryptocurrency cognoscenti tread carefully and know that this type of value remains more susceptible than ever to the vagaries of a new economy that is still under construction, some elements appear to indicate consolidation in Bitcoin.

Thanks ETF

Indeed, it is taking full advantage of the positive return from the launch of a new investment product, a bitcoin index fund (ETF), which directly tracks the price of the digital asset. Analysts predicted that this new type of investment, which was highly anticipated in the sector, would allow a large portion of the population to invest in this cryptocurrency without having to own it directly.

Following the approval of these ETFs by the US market watchdog, the SEC, the price of Bitcoin rose to $49,021 on January 11. An existing fund owned by asset manager Grayscale, which had more than $28 billion in assets before SEC approval, was notably converted into an ETF. However, wanting to cash out their winnings, some clients of the Grayscale fund decided to withdraw several billion dollars, which briefly caused the value of Bitcoin to fall.

But “as expected,” “outflows from the Grayscale fund decreased after the first two weeks,” notes Matteo Greco, digital asset and investment fintech analyst at Fineqia. This explains the symbolic threshold of $50,000 that was crossed this Monday.

The phenomenon of “halving”

Another factor explaining the renewed appetite for Bitcoin is a rare event scheduled for April next year, the consequences of which the market expects could contribute to a decrease in the number of Bitcoins in circulation and therefore an increase in their value. This “halving” is a technical phenomenon of halving the rewards of Bitcoin miners (those who contribute to the creation of blockchains) and occurs approximately every four years.

Likewise, the cryptocurrency is also riding on increased expectations of rate cuts, particularly from the Federal Reserve (Fed). This prospect increases the amount of liquidity in circulation and encourages investors to pay more attention to assets such as Bitcoin.

Enough, according to Victoria Scholar, an analyst at Interactive Investors, to “stimulate risk appetite and demand for cryptocurrencies.”