Bitcoin Smashes $50,000 Following $1.1 Billion Inflows: New ATH Soon?

Bitcoin has finally reclaimed the $50,000 mark after two years!

Bulls are back in the crypto town as the price of Bitcoin (BTC) surpassed $50,000 earlier today following massive inflows into the crypto market, on-chain data shows. This is the highest level in two years. The flagship crypto is currently trading at around $49,700, up 3% in the last 24 hours. Bitcoin’s next target is the $51,000-$55,000 range.

There is a lot of intertest in cryptos now. People see it as an emerging asset class. With big buying, higher prices are likely in 2024.

Bitcoin Blasts Higher

Last week, Bitcoin broke through the $48,000 mark after a month of moving sideways in the $40,000 – $43,000 range. With Bitcoin gaining momentum, the bulls have also revisited other top coins. ETH surged past $2,600, up around 4.7% in the last 24 hours, ADA was up 3.35% to $0.55, Binance Coin (BNB) was up around 2% to $328, and Solana (SOL) surged to around $110.

According to a recent report from CoinShares, over $1.1 billion was poured into the crypto market last week, with Bitcoin accounting for 98% of the inflows. The other two major coins that also saw significant investments were Ethereum (ETH) and Cardano (ADA), with $16.5 million and $6.1 million in inflows, respectively.

The surge in inflows came amid massive inflows into spot Bitcoin exchange-traded funds (ETFs). BitMEX Research revealed that spot Bitcoin fund inflows surged to $541 million on Friday, the largest level excluding the first trading day.

Additionally, Grayscale Bitcoin Trust, Grayscale’s spot Bitcoin ETF, experienced an outflow slowdown of over $51 million on Friday. This trend indicates less selling pressure from Grayscale’s spot ETFs.

ETFs create an easy way for people to buy into Bitcoin. Many investors are comfortable with ETFs, so there may be more money coming into the crypto market.

ETFs Hit The Market

Apart from these newly launched spot ETFs, other factors, including the coming Bitcoin halving and the anticipated Fed’s monetary policy, potentially contribute to Bitcoin’s price momentum. The fourth halving event is set to happen in less than two months, which will see the block mining reward cut from 6.25 BTC to 3.125 BTC.

While the halving does not directly affect price, it may create supply and demand dynamics, especially given the fact that Wall Street is accumulating more Bitcoin following the spot Bitcoin ETF launch. BlackRock and other ETF providers currently hold over 200,000 BTC in one month. This figure even surpasses MicroStrategy’s 190,000 BTC. These ETFs now account for almost 1% of Bitcoin in circulation, and the percentage is expected to grow.

Historically, a Bitcoin halving has set the stage for a bull run, with Bitcoin typically hitting a new record high. For instance, following the third halving on May 11, 2020, Bitcoin climbed to nearly $69,000 – its new all-time high – in November 2021. Historical data shows a similar pattern in the first and second halvings.

Meanwhile, the Fed’s monetary policy shift could benefit Bitcoin’s price. Fed Chair Jerome Powell said in a recent speech that the federal agency would unlikely hike interest rates. While this remark didn’t necessarily imply a rate cut, it suggested a looser monetary policy.

“The question of when it will be appropriate to cut rates is coming into view,” Powell stated.

The Fed has been tightening its monetary policy since early last year with the goal of combating high inflation, which is well above the Fed’s policy goal of 2%. According to updates from the Bureau of Labor Statistics, inflation was up 3.4% in December 2023.

Lowering interest rates or quantitative easing tends to attract more capital into investment avenues, including crypto, potentially creating a rally scenario, unlike rate hikes, which often drive investors away from riskier assets like Bitcoin and altcoins.

We may see much lower rates in the coming years, as government debt expands globally.