For the first time since the end of 2021, Bitcoin has exceeded the $50,000 mark again. According to experts, the recently approved cryptocurrency ETFs are making their presence felt. Consumer advocates remain skeptical.
After more than two years, Bitcoin is once again worth more than $50,000. The world’s largest crypto asset had already overcome the psychologically important mark yesterday evening, and today it was able to maintain the threshold at least temporarily.
Bitcoin has been benefiting from increasing interest for a few days now. Apparently the introduction of special funds is becoming increasingly noticeable. The Exchange Traded Funds (ETF) were approved by the US Securities and Exchange Commission in January, but this only caused price euphoria for a short time.
Bitcoin ETF with $2.8 billion inflows
At the beginning of the year, the currency broke the $45,000 mark, which was the highest level since April 2022. Since January 22nd alone, the rate has now risen by another 25 percent. “The launch of the ETF investment vehicles is now beginning to bear fruit,” commented crypto expert Timo Emden from Emden Research. “The capital inflow is grist for the investors’ mill.”
The approved spot ETFs on Bitcoin are novel because they allow investors for the first time to invest in Bitcoin without having to directly purchase the digital currency itself. According to calculations by the Bloomberg news agency, the new funds received around $2.8 billion net in the last 30 days. The gross amount is significantly higher, but this also involves reallocations within the crypto industry.
In addition, another event makes investors look positively on Bitcoin: the next so-called “Halving” is scheduled for April. The reward that Bitcoin miners receive for verifying crypto transactions is reduced every four years. Ultimately, the process leads to a slower growing supply of Bitcoin, which has so far mostly led to rising prices.
Alternative to gold or total loss?
James Butterfill, head of research at Coinshares, expects further increases in the coming months. In a conversation with the dpa news agency, the expert compared Bitcoin with the precious metal gold. “Bitcoin and gold are investments. It’s just that Bitcoin is more technically advanced than gold because you can transfer it over the phone or the Internet, for example.”
Investors were looking for alternative stores of value, Butterfill said. The market value of all Bitcoins currently corresponds to around eight percent of the value of all gold holdings worldwide. “If we got to 14 percent, the rate would be $100,000. Some will think I’m crazy if I said that the Bitcoin rate would go to $100,000. But if I said that Bitcoin would be 14 percent of the price in the future That would make up the market value of gold, that sounds quite realistic.”
Meanwhile, consumer advocates continue to warn about the risks. “Today, no one can reliably predict whether Bitcoins, variants thereof or other cryptocurrencies will become established as an alternative to conventional monetary systems in the medium term,” says the consumer advice center. Bitcoins are not recommended as an investment due to the risks involved. Above all, she mentions the very strong price fluctuations, including a possible total loss, and the lack of security systems.
Scandals in the crypto scene
The head of the SEC, Gary Gensler, also recently warned against investing in the cryptocurrency on the occasion of the approval of the Bitcoin index funds: it is “speculative and highly volatile” and has already been used for money laundering and other illegal activities. Investors should be careful – there are a “countless” number of risks. The stock exchange regulator had to approve the index funds after a court ruling.
Bitcoin reached its previous high of almost $69,000 in 2020. However, a series of scandals subsequently caused the price to collapse. Last year, for example, the world’s second largest cryptocurrency platform FTX went bankrupt. The boss, Sam Bankman-Fried, faces up to 110 years in prison because, according to the indictment, he embezzled customer funds.
In addition, the founder and former head of the world’s largest cryptocurrency platform Binance, Changpeng Zhao, was arrested in the USA on money laundering charges in November. Zhao has already pleaded guilty.