The world’s largest cryptocurrency has made a significant rebound, surpassing the $50,000 mark after experiencing a dip below $40,000 in the days following the introduction of spot ETFs.
Since the launch of spot ETFs on January 11, Bitcoin (BTC) has entered a bullish phase, reaching new heights not seen in over two years.
Despite the initial stumble following the introduction of spot ETFs, which saw billions of dollars flowing into these new investment vehicles, investor focus appeared to shift towards the high-fee Grayscale Bitcoin Trust (GBTC), resulting in a decline in Bitcoin’s price to as low as $38,500 shortly after the ETFs became operational.
However, recent developments have shown a slowdown in outflows from GBTC, coupled with significant inflows into the new ETFs. On February 8, Grayscale reported a reduction of just 1,850 bitcoins, while the other nine ETFs saw an addition of nearly 11,000 tokens to their portfolios.
This trend continued on February 9, with Grayscale losing 2,252 coins while the other ETFs added over 13,000. To provide context, only 900 newly mined bitcoins enter the market each day, a figure set to decrease to 450 per day after the Bitcoin halving in April.
The end of the crypto winter is marked by Bitcoin’s resurgence. Having peaked at around $69,000 in November 2021, 2022 was a tumultuous year with the collapse of the Terra ecosystem, the demise of the crypto exchange FTX, and the controversies surrounding its founder, Sam Bankman-Fried, among other notable events.
Bitcoin closed 2022 slightly above $16,000, representing a significant drop of approximately 75% from its all-time high, with many other cryptocurrencies experiencing even more substantial losses.
Despite the challenges faced in 2022 and 2023, 2023 emerged as a notable period for the crypto market. While Bitcoin’s performance remained subdued for much of the year, with the price hovering around $27,000 on October 1st, it experienced a surge in confidence towards the end of the year.
This confidence stemmed from expectations that the SEC, after years of hesitation, would finally approve spot Bitcoin ETFs in early 2024. As a result, Bitcoin’s price surged by nearly 60% in the final three months of 2023, closing the year above $42,000.