Bitcoin’s comeback continues, as the most popular cryptocurrency’s price reached $50,000 Monday (Feb. 12).
It was the first time that bitcoin hit that price since December 2021, marking a recovery for a digital asset whose value plummeted 64% in 2022.
The latest rally has been fueled by hopes that the Securities and Exchange Commission’s January approval of exchange-traded funds to own bitcoin will directly foster wider mainstream acceptance of cryptocurrency, Bloomberg reported Monday.
“There is a lot of talk about inflow of money into this asset,” said Matt Maley, chief market strategist at Miller Tabak, per the report. “I’d also note that the momentum players are getting excited as well.”
Meanwhile, investors in the larger financial ecosystem are once more embracing risk on the expectation that the Federal Reserve will ease monetary policy, the report said. With interest rates higher, riskier assets like crypto may seem less attractive.
And as PYMNTS wrote last week, the crypto sector of 2024 might even be called “boring,” at least when compared to the events of last year.
Bitcoin ETFs have regulatory approval, and at least one player in the marketplace has even begun to swap out its “cryptocurrency” moniker for “the more staid and presumably respectable ‘cryptofinance’ name,” the report said.
“Meanwhile, Sam Bankman-Fried, a slew of rise-and-fall NFTs, and other bubble-prone scam coins have all been exposed, while crypto prices have recovered,” PYMNTS wrote. “The market valuation of the digital asset industry, for example, has roughly doubled over the past year.”
However, that report said, there are some caveats. For example, when announcing the SEC’s public approval of bitcoin ETFs, Chairman Gary Gensler wrote: “Though we’re merit neutral, I’d note that … bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion and terrorist financing.”
He added that the ETF approval does not indicate the SEC’s approval or endorsement of bitcoin, and he cautioned investors to be wary about its risks.
“Hardly the ringing endorsement that crypto enthusiasts have seen as proof that cryptofinance can be a viable part of the financial ecosystem,” PYMNTS wrote.
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