- Bitcoin recently breached the $50,000 price point for the first time in two years.
- A combination of key factors has driven the asset’s recent rally.
- Analysts continue to eye new yearly highs ahead of the halving.
Coming off the back of an explosive 2023, many expected Bitcoin to show even more strength in 2024 with the anticipated approval of spot Bitcoin ETFs in the U.S. However, Bitcoin did the unexpected by retracing 20% following the approval of these products.
But after weeks of lackluster price movements, the leading crypto asset appears to have found its floor in a rally that has culminated in breaking above the psychological $50,000 price level for the first time in over two years, begging the question of what is driving the recent rally.
A Coalescence of Positives
Over the past 24 hours, the price of Bitcoin has experienced a significant upswing to peak over the psychological $50,000 price level for the first time since December 2021, in another milestone marking the asset’s recovery from the horrific bear market of 2022 that wiped out several leading crypto firms.
Over the past week, the asset’s price moves have been increasingly linked with aggressive whale accumulation. On Sunday, February 11, prominent crypto analyst Ali Martinez, sharing Santiment data, noted that Bitcoin whales with holdings between 1,000 BTC and 10,000 BTC have accumulated about 140,000 BTC in the past three weeks worth over $6 billion.
At the same time, recently approved Bitcoin ETFs have added to the asset’s demand. As outflows from Grayscale’s GBTC slowed in the past week, U.S. Bitcoin ETFs bagged net inflows of about $1.2 billion.
Underlying the Bitcoin demand is the anticipation of the halving expected in April 2024, which will further reduce the rate at which miners can produce new coins, adding to the asset’s scarcity narrative.
There is also a growing broader risk on appetite amongst investors amid anticipation that the Federal Reserve will cut interest rates, allowing people access to loans at more affordable rates for investment. This market sentiment has seen the S&P 500 hit new highs at around $5,000.
Sponsored
What’s next for Bitcoin after $50k?
Analysts Eye More Upside
While still allowing room for the possibility of a brief pause at $58,000, prominent technical analyst “Duo Nine” asserts that Bitcoin faces little resistance on a potential path to all-time highs at around $69,000
Market sentiment analysis from Ali Martinez seems to support Duo Nine’s view of more upside. The analyst suggested that the market had entered a new phase of belief after weathering the anxiety brought on by the recent 20% correction.
"This transition suggests that we might see additional upward momentum for Bitcoin before reaching the peak of euphoria that characterizes the end of the bullish cycle," he wrote.
However, slightly deviating from these views, MN Trading founder Michaël van de Poppe has opined that there is a chance for a short-term correction to around $46,000, as Bitcoin’s price has now hit a local range high. Still, van de Poppe maintains that support at $46,000 could see Bitcoin bounce to anywhere between $53,000 and $57,000 before the halving.
On the Flipside
- Bitcoin has shed some of its gains to trade at $48,500, according to CoinMarketCap data at the time of writing. The price decline can be linked to recently released U.S. inflation data failing to meet expectations, adding uncertainty about when the Fed would lower interest rates.
- At the time of writing, Bitcoin’s price remains 30% below its all-time high of around $69,000.
Why This Matters
Understanding the reasons for Bitcoin’s recent rally can provide insight into whether it is sustainable.
Read this for more on Bitcoin’s recent price performance:
Bitcoin Bounces Back: Pre-Halving Rally Defies ETF Lows
Learn about Polygon’s 2.0 roadmap progress:
Polygon (MATIC) Sets Date To Hit Major Goal in 2.0 Vision
