For the first time in over two years, Bitcoin surged past $50,000 on Tuesday, as investors became increasingly confident that further US legalization of the cryptocurrency would increase demand.
Expectations that US lawmakers would approve the establishment of exchange-traded funds (ETFs) that follow the price of cryptocurrencies and allow the general public to invest in them without having to buy them directly have contributed to the recent surge in the price of cryptocurrencies.
Following a sharp decline following Washington’s approval last month, bitcoin has increased by almost 25% since January 22.
According to Bloomberg statistics, that surge caused it to reach as high as $50,328, its highest level since late 2021.
And observers were optimistic about the outlook.
“Enthusiast buyers bring in more enthusiast buyers pushing prices further up,” Fadi Aboualfa, of Copper Technologies, said.
“The cryptocurrency has momentum on the back of several green weeks and has a large chance of going up further when markets see weekly movements upwards of 10 percent (as we saw last week).”
By 0330 GMT Tuesday, bitcoin had dropped slightly, to $49,950.
The currency remains well below its record value of almost $69,000 in 2020, but the rally marks a recovery following a series of high-profile scandals and collapses that rocked the crypto industry.
FTX, the second-largest cryptocurrency exchange globally, experienced a sharp decline in business last year, and its CEO, Sam Bankman-Fried, was hit with up to 110 years in jail for what the prosecution called “one of the biggest financial frauds in American history”.
Furthermore, Changpeng “CZ” Zhao resigned from his position as CEO of Binance, the largest cryptocurrency exchange in the world, in November following the company’s and his guilty plea to many charges of money laundering.
The expectation that the US Federal Reserve will begin to reduce interest rates this year as inflation starts to decline has also helped bitcoin.
The asset’s value has been driven by the supply crunch expected next year because of an event called “halving”.
Bitcoin is produced, or “mined,” as a prize for utilizing powerful computers to resolve challenging issues.
However, the quantity of bitcoin is restricted, and the payout is cut in half every four years. May is when the next “halving” is scheduled.
