By Hannah Lang and Elizabeth Howcroft

WASHINGTON/LONDON (Reuters) -Bitcoin hit the $50,000 degree for the primary time in additional than two years because the world’s largest cryptocurrency was buoyed by expectations of rate of interest cuts later this 12 months and final month’s regulatory nod for U.S. exchange-traded funds designed to trace its value.

The cryptocurrency has risen 16.3% to this point this 12 months, on Monday touching its highest since Dec. 27, 2021. At 12:56 p.m. EST (1756 GMT), bitcoin was up 4.96% on the day at $49,899, having oscillated across the $50,000 degree.

“$50,000 is a big milestone for bitcoin after the launch of spot ETFs final month not solely didn’t elicit a transfer above this key psychological degree however led to a 20% sell-off,” mentioned Antoni Trenchev, co-founder of crypto lending platform Nexo.

Crypto shares additionally loved a lift on Monday, with crypto alternate Coinbase (NASDAQ:) up 4.9% and crypto miners Riot Platforms (NASDAQ:) and Marathon Digital (NASDAQ:) up 10.8% and 11.9%, respectively. Shares of software program agency MicroStrategy — a notable purchaser of bitcoin — have been up 10.2%.

The value of ether, the second-largest cryptocurrency, was up 4.12% at $2,607.57.

World inventory indexes additionally edged increased on Monday, as merchants regarded for cues on when the U.S. Federal Reserve may start reducing rates of interest. Analysts and monetary market expectations each level to Might as a possible begin for price cuts this 12 months.

ETF EXUBERANCE

The first driver behind bitcoin’s latest value appreciation “could be attributed to the elevated influx into BTC spot ETFs,” mentioned Matteo Greco, a analysis analyst at fintech funding agency Fineqia Worldwide, in a analysis be aware.

The U.S. securities regulator on Jan. 10 authorised the primary U.S. spot bitcoin ETFs, a watershed for the world’s largest cryptocurrency and the broader crypto trade, which had been attempting to deliver such a product to marketplace for greater than a decade.

Greco particularly famous that outflows from Grayscale Funding’s Grayscale Belief — which obtained approval from the U.S. Securities and Change Fee (SEC)in January to transform to an ETF — have begun to sluggish.

“Whereas GBTC recorded a cumulative outflow of $415 million final week, representing a big discount from earlier weeks, BTC Spot ETFs noticed a complete internet influx of about $1.2 billion throughout the identical interval, marking the very best weekly influx since their launch,” he mentioned.

Analysts at Bernstein have estimated that flows into the brand new ETFs will construct up regularly to cross $10 billion in 2024, whereas Normal Chartered (OTC:) analysts have mentioned the merchandise might draw $50 billion to $100 billion this 12 months alone. Different analysts have mentioned inflows could possibly be $55 billion over 5 years.

The market can also be eyeing seven pending functions in entrance of the U.S. SEC for ETFs tied to the spot value of ether. The SEC is because of ship a ultimate determination on a number of of these proposals by Might.

Buyers are additionally trying eagerly to the subsequent bitcoin “halving,” anticipated in April, analysts say. That course of is designed to sluggish the discharge of bitcoin, whose provide is capped at 21 million tokens – of which 19 million have already been created. Bitcoin rallied on the earlier three halvings, the latest of which was in 2020.

“With () fourth bitcoin halving, a primary Fed rate of interest lower and potential ethereum spot ETF approval, all are vital for what’s the smallest, youngest and most retail-dominated asset class,” mentioned Ben Laidler, world markets strategist at eToro.