Since the launch of Bitcoin investment funds at the beginning of the year, there has been a swift shift in the market for tokens. On Monday, the price of Bitcoin had its first trading above $50,000 after 2021.
Since the beginning of the year, the main cryptocurrency market has increased by about 15%. This growth has been partially attributed to the approval of many spot Bitcoin exchange-traded funds (ETFs) by significant players, such as BlackRock, the largest asset management in the world. But in the days that followed the SEC’s (Securities and Exchange Commission) approval, Bitcoin’s value fell by over 15%, in spite of the great anticipation that surrounded their introduction.
Analysts claim that the recent rise in the token’s value to $50,000—more than twice as high as it was a year ago—demonstrates how ETFs are bringing fresh capital into the market and offer a chance for a big long-term turning point for Bitcoin.
James Butterfill, Head of Research at CoinShares, a cryptocurrency investment organization, stated, “After a disappointing start for multiple Bitcoin ETFs, we are now seeing consistent inflows into recently introduced funds, and I believe we are witnessing increased institutional demand for Bitcoin as a result.”
Asset managers are now concentrating on long-term investment in Bitcoin ETFs following the initial waves of admission into new spot Bitcoin ETFs and the exit of the modified product of grayscale investment trust.
Even after more than $6 billion was removed from grayscale’s products on the first day of ETF trading, CoinShares’ disclosed data shows that the recently authorized Bitcoin ETFs have attracted net inflows of about $3 billion.
It is envisaged that someday, in addition to traditional stocks and bonds, mainstream investors would commit a modest portion of their portfolios to Bitcoin ETFs as traditional finance continues to merge with the cryptocurrency world.
According to Tom Hower, Managing Director of Brown Brothers Harriman’s U.S. ETF Services team, “It’s only a matter of time until you start to see dedicated allocations for this with a long track record.” I believe this area will find adoption and interest.”
“People are being advised that they must comprehend the significance of leaving zero,” continued Kathy Kreski, Senior Alternate ETF Strategist at Invesco, who collaborated with Galaxy Digital to introduce a Bitcoin ETF last month. She stated, “In my opinion, going from zero to 1% is a positive outlook.” Investors can start with an exposure of 1% from their equity exposure and can start to specialize in Bitcoin.
The idea that the cryptocurrency sector has survived the harshest legal sanctions and controversies is also heartening. The largest exchange in the world, Binance, was fined $4.3 billion by American authorities in November after it was claimed that it had violated international sanctions and laundered money.
Expectations that central banks would cut interest rates this year, which will make riskier assets more appealing to investors, are another reason for the confidence surrounding Bitcoin. An update scheduled for April is predicted to further benefit the leading cryptocurrency market by slowing down the flow of accessible Bitcoins on the Bitcoin network.
Still, some economists don’t think Bitcoin will continue to rise as quickly as it has.
According to George Town, who is connected to the Macquarie Psaros Center for Financial Markets and Policy, “I am sure Bitcoin [bears] will say that the world is waking up to the reality of Bitcoin, but how absurd the environmental system of Bitcoin, it’s difficult to tell who is buying and why.” He stated that “the price of Bitcoin will continue to rise aggressively based on the number of devoted supporters who prefer to buy and the number of doubters who want to sell.”
“If you pay attention to the value of Bitcoin with an attentive eye, then nearly everything online is short-term technical analysis, and virtually no point has been made about its fundamental value,” Angel said.
