The bitcoin The year has started with a rise of 19%. The main cryptocurrency rises above $50,000 for the first time since December 2021 and Ethereum, the second digital currency by capitalization, reaches $2,600.
The recent increases come after the Securities and Exchange Commission (SEC) approved the launch of spot bitcoin ETFs on January 11 and unleashed the ‘crypto’ euphoria on the stock market. Specifically, it confirms that the North American regulator gave the green light to 11 spot bitcoin ETFs.
“This is a historic milestone for the world of cryptocurrencies, as ETFs allow more retail investors to own bitcoins indirectly through a share traded on a stock exchange. In practice, it makes it easier for investors to be exposed to cryptocurrencies without having to do so through crypto platforms or private wallets,” Funcas points out.
In January, this approval did not cause a great rise in bitcoin, since it was news that was highly anticipated by investors and was already reflected in the price of cryptoassets. Caroline Bowler, executive director of the cryptocurrency platform BTC Markets, pointed out this Monday in an interview with ‘Bloomberg TV’ that there are signs of a “growing movement of institutional money” towards this key asset. Bloomberg points out that cryptocurrency ETFs achieved more than $400 million in net inflows last Friday, the third best day for these assets since its approval on January 11.
The rise in bitcoin coincides, in turn, with the recent highs seen on Wall Street. The S&P 500 surpassed 5,000 points this Thursday for the first time in its history. On Monday, both the S&P and the Dow Jones Industrial Average reached new intraday highs.
Bitcoin has accumulated seven consecutive sessions of increases, a milestone it has not achieved since January of last year. At that moment, it began to recover the lost ground after sinking due to the bankruptcy of the stable cryptocurrency -stablecoin- Terra USD and the beginning of the tightening of interest rates to fight inflation. In 2022, bitcoin had the worst year in its history, losing 65%.
In the last twelve months, bitcoin accumulates a rise of 124% and it is the asset that has appreciated the most in this period thanks to the promise that the United States Federal Reserve has made to lower interest rates three times in 2024. In 2023, the main cryptocurrency ended with a cumulative increase of 108 %.
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In the markets, a high cost of money or expectations that central banks will increase rates benefits fixed income and penalizes risk assets. On the contrary, the most risky assets and volatility -technological, biotechnological or cryptocurrency stocks- attract investors if monetary policies are no longer restrictive.
Risk asset
Profitability cannot cover, however, the volatility of bitcoin. and the rest of crypto assets. Despite its increases, anyone who enters bitcoin on January 1, 2022 only accumulates a revaluation of 4.7%. “The percentages have these things and we must be very, very clear if we want the percentages to work in our favor. Let’s try to lose the minimum possible capital, since the recovery in case of incurring losses will be harder,” explains José Antonio Madrigal, founder of the Eurekers stock market community.