Bitcoin surged above $50,000 on Tuesday, marking its highest level in over two years, as investors grew optimistic about broader trading approval in the US, which is anticipated to increase demand for the cryptocurrency.
In recent months, Bitcoin has experienced significant growth, driven by expectations that US lawmakers will permit the creation of exchange-traded funds (ETFs) tracking its price, enabling public investment in crypto without direct purchase.
Despite an initial drop following last month’s green light from Washington, Bitcoin has rallied approximately 25 percent since January 22, reaching as high as $50,328, according to Bloomberg data, its highest value since late 2021.
Observers have expressed optimism about its future prospects. Fadi Aboualfa of Copper Technologies remarked, “Enthusiast buyers attract more enthusiast buyers, driving prices upward. The cryptocurrency’s momentum, coupled with several consecutive weeks of gains, increases the likelihood of further price appreciation.”
However, on Tuesday, Bitcoin experienced a slight dip to $49,950.
Although still below its peak value of nearly $69,000 in 2020, this rally signals a recovery from a series of high-profile scandals and collapses that rattled the crypto industry. Last year, FTX, the world’s second-largest crypto exchange, collapsed, leading to legal repercussions for its CEO, Sam Bankman-Fried, who faces potential imprisonment for alleged financial fraud. Similarly, in November, Changpeng “CZ” Zhao resigned as CEO of Binance, the world’s largest crypto exchange, following allegations of money laundering violations.
Bitcoin has also been buoyed by hopes of interest rate cuts by the US Federal Reserve this year, amid easing inflation. Moreover, the asset’s value has been influenced by anticipation of a supply shortage next year due to an event known as “halving”.
Bitcoin mining, which involves solving complex problems with powerful computers to create new coins, operates on a limited supply basis, with the reward halved every four years. The next “halving” is scheduled for May.