- Bitcoin briefly topped $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 hold above that level.
- Spot bitcoin exchange-traded funds (ETFs) at the end of last week posted their strongest net inflows since the start of trading in January.
- A Grayscale report points to spot bitcoin ETF inflows and the upcoming bitcoin halving as potential tailwinds for prices.
- The pro-bitcoin president of El Salvador 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 round up of cryptocurrency market news, why that matters to you and what it means for crypto investors in the coming days.
Bitcoin price (BTCUSD) popped past $50,000 on Monday, for the first time since late 2021, riding a strong bullish sentiment propelled by bitcoin exchange-traded fund (ETF) inflows, exuberance around the upcoming halving, and the re-election of El Salvador’s pro-bitcoin president, Nayib Bukele.
What Happened In Crypto Markets Last Week?
Bitcoin investors enjoyed a roughly 15% rally over the past week through midday Monday to touch $50,000 from under $43,000. Much of that is credited to spot bitcoin ETFs but that wasn’t the only factor driving up prices.
Spot Bitcoin ETFs Were On a Roll
Spot bitcoin ETFs that were recently approved by U.S. regulators experienced their second-largest day in terms of inflows last Friday, with a little more than $540 million flowing into various bitcoin ETF offerings that day.
Thursday showed strong numbers for the ETF category as well, with more than $400 million of net inflows. This despite more than $150 million flowing out of Grayscale Bitcoin Trust (GBTC) over the two-day period. BlackRock’s iShares Bitcoin Trust (IBIT) accounted for nearly half of all inflows over 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 only one month of existence.
Bitcoin Halving Optimism Propped Up Price
The combination of robust spot bitcoin ETF inflows and the scheduled bitcoin halving event expected by midyear—which will cut in half the value of rewards for mining bitcoin—appears to be driving the positive narrative in crypto overall, as indicated in a report issued by crypto investment firm Grayscale Advisors LLC last week.
The report suggested that the coming round of bitcoin halving differs significantly from previous ones and may not prove all negative for bitcoin miners.
“While the reduction in block rewards poses a challenge, the growing roles of ordinal inscriptions and Layer 2 projects within the Bitcoin ecosystem have recently emerged as promising use cases,” the report said.
Bitcoin ordinals assign more information to the serial numbers of each satoshi, the smallest bitcoin unit and the extra data is referred to as an inscription. Layer 2 projects are meant to improve the throughput—or processing speed—of any cryptocurrency blockchain network.
“These innovations may offer a silver lining for miners by potentially both enhancing transaction throughput and increasing transaction fees for the network,” the Grayscale report said.
El Salvador’s Crypto-Loving President Got Another Term
A bitcoin-relevant geopolitical event was the re-election of pro-crypto President Nayib Bukele in El Salvador via a landslide victory.
The country has accumulated bitcoin to hold in reserve and made the cryptocurrency legal tender in 2021 under Bukele’s leadership, among other initiatives, although momentum has been limited for his highly publicized plans for a tax-free crypto haven powered by geothermal energy from a volcano, according to Reuters.
Beyond bitcoin, another news development in crypto was the temporary halting of the Solana (SOLUSD) network on Feb. 6 due to a bug. The level of centralization in Solana, which has experienced heightened activity in recent months, and limited ability for the network to be paused 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 be tracking how high bitcoin can do after breaking through the key price level on Monday. The crypto asset previously faced resistance below $50,000 in late March 2022 and in early January of this year. However, analysts at Bernstein expect a “FOMO” or fear-of-missing-out rally in bitcoin.
In other notable crypto happenings, the Craig Wright v. Crypto Open Patent Alliance (COPA) case will continue in the UK. Wright is facing charges of “industrial scale” forgeries in an attempt to convince people he is bitcoin creator Satoshi Nakamoto.
First appeared on www.investopedia.com