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

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

Cautious optimism. The processors of bitcoin know too well how the value of their cryptocurrency has fluctuated greatly in recent years, sometimes reaching new heights before suddenly collapsing… It is therefore with reason, but also with a smile, that they saw bitcoin exceed the $50,000 mark this Monday for the first time in more than two years.

A revival of form which finds its origin in several economic factors but which also remains to be confirmed over time. Explanations.

12 months of spectacular increase

Around 5:30 p.m. GMT (6:30 p.m. in Paris), 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 followed cryptocurrencies of a thunderous start to the year, with nearly 18% since the start of the year, but above all the last twelve of spectacular increases: its price has indeed soared by more than 200% since January 2023!

What to dream of a return to the top of the value of bitcoin, with your sights set on the absolute record for November 2021 at $69,000 ? If connoisseurs of cryptocurrency play it safe and know that this type of value remains more than ever subject to the vagaries of a new economy still under construction, several elements seem to attest to a consolidation of bitcoin.

Thanks to the ETFs

Indeed, it benefits fully from the return of the positive effect of the launch of a new investment product, a bitcoin index fund (ETF) which directly tracks the price of the digital asset. Highly awaited by the sector, analysts had predicted that this new type of investment would allow a larger part of the general public to invest in this cryptocurrency without having to hold it directly.

Following the approval of these ETFs by the American market watchdog, the SEC, the price of bitcoin consequently rose to $49,021 on January 11. An existing fund belonging to asset manager Grayscale, which had more than $28 billion in assets before the SEC green light, was notably converted into an ETF. However, wishing to cash in their winnings, some clients of the Grayscale fund decided to withdraw several billion dollars, briefly causing the value of bitcoin to fall.

But “as expected,” “outflows from Grayscale’s fund declined after the first two weeks,” notes Matteo Greco, analyst for digital assets and fintech investment firm Fineqia. Thus explaining this symbolic bar of 50,000 dollars crossed this Monday.

The “halving” phenomenon

Another factor which explains this renewed appetite for bitcoin is a rare event, planned for next April, the consequences of which the market anticipates could contribute to making the quantity of bitcoins in circulation rarer and therefore increasing their value. This is “halving”, a technical phenomenon which consists of halving the reward of bitcoin “miners” (those who contribute to the creation of blockchains) and which occurs approximately every four years.

Likewise, the cryptocurrency is also riding on the strengthening of expectations of rate reductions, in particular from the Federal Reserve (Fed). This prospect increases the amount of liquidity in circulation and encourages investors to turn more towards assets like bitcoin.

Ample enough, according to Victoria Scholar, analyst at Interactive Investors, to “stimulate the appetite for risk and demand for cryptocurrencies”.

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