Key takeaways
- Bitcoin briefly surpassed $50,000 for the first time in more than two years at midday Monday, and this week analysts are tracking whether it can rise and stay above that level.
- Spot bitcoin exchange-traded funds (ETFs) late last week recorded their strongest net inflows since trading began in January.
- A Grayscale report notes that bitcoin ETF inflows and the upcoming bitcoin halving are possible tailwinds for prices.
- El Salvador's pro-bitcoin president was re-elected for another term.
- The Solana network experienced another outage, temporarily halting the use of decentralized applications built on that blockchain.
A weekly summary of cryptocurrency market news, why it's important to you, and what it means for cryptocurrency investors in the coming days.
The price of Bitcoin (BTCUSD) surpassed $50,000 on Monday, for the first time since late 2021, thanks to strong bullish sentiment driven by bitcoin exchange-traded fund (ETF) inflows, exuberance around the upcoming halving and the re-election of the president of El Salvador. The pro-bitcoin president, Nayib Bukele.
What happened in the crypto markets last week?
Bitcoin investors enjoyed a roughly 15% rally over the past week through midday Monday to touch $50,000 from below $43,000. Much of that is attributed to bitcoin ETFs, but that wasn't the only factor driving prices up.
Bitcoin Spot ETFs Were On a Roll
Spot bitcoin ETFs that were recently approved by US regulators experienced their second-largest day in terms of inflows last Friday, with just over $540 million flowing into various bitcoin ETF offerings that day.
Strong numbers were also shown for the ETF category on Thursday, with over $400 million in net inflows. This despite more than $150 million leaving the Grayscale Bitcoin Trust (GBTC) during the two-day period. BlackRock's iShares Bitcoin Trust (IBIT) accounted for nearly half of all inflows during those two days.
According to Bloomberg Senior ETF Analyst Eric Balchunas, IBIT and Fidelity's Wise Origin Bitcoin Fund (FBTC) are the two largest ETFs in history when measured by assets held after just one month. of existence.
Bitcoin Halving Optimism Propped Up Price
The combination of strong bitcoin spot ETF inflows and the bitcoin halving event scheduled for mid-year, which will halve the value of rewards for mining bitcoin, appears to be driving the positive narrative in cryptocurrencies. in general, as indicated in a report issued by crypto. investment firm Grayscale Advisors LLC last week.
The report suggested that the next round of bitcoin halving differs significantly from previous ones and may not turn out to be entirely negative for bitcoin miners.
“While the reduction of block rewards poses a challenge, the growing role of ordinal enrollments and Layer 2 projects within the Bitcoin ecosystem have recently emerged as promising use cases,” the report says.
Bitcoin ordinals map more information to the serial numbers of each satoshi, the smallest unit of bitcoin, and the additional data is called an inscription. Layer 2 projects are intended to improve the performance (or processing speed) of any cryptocurrency blockchain network.
“These innovations can offer a silver lining for miners by potentially improving transaction throughput and increasing transaction fees for the network,” the Grayscale report says.
El Salvador's crypto-loving president won another term
A relevant geopolitical event for bitcoin was the re-election of pro-cryptocurrency president Nayib Bukele in El Salvador through a landslide victory.
The country has stockpiled bitcoins to hold in reserve and made the cryptocurrency legal tender in 2021 under Bukele's leadership, among other initiatives, although momentum has been limited by his much-publicized plans for a tax-free crypto haven powered by geothermal energy from a volcano. according Reuters.
Solana Court
Beyond bitcoin, another first in the cryptocurrency space was the temporary outage of the Solana (SOLUSD) network on February 6 due to an error. The level of centralization on Solana, which has seen increased activity in recent months, and the limited ability to pause the network for maintenance is something the crypto system has been criticized for in the past.
What to expect from crypto markets this week
This week, analysts will monitor how high Bitcoin can go after breaking above the key price level on Monday. The crypto asset previously faced resistance below $50,000 in late March 2022 and early January this year. However, Bernstein analysts expect a bitcoin rally in “FOMO,” or fear of missing out.
In other notable crypto developments, the Craig Wright v Crypto Open Patent Alliance (COPA) case will continue in the UK. Wright faces charges of forgeries on an “industrial scale” in an attempt to convince people that he is bitcoin creator Satoshi Nakamoto.
