Bitcoin Back at $50k: New Dawn or Deja Vu?

Bitcoin has cracked the $50k barrier for the first time since 2021.

An achievement for sure, but the response in the market feels, shall we say… muted.

Let's explore why, by taking a trip back in time.

It’s February 2021…

• The Texas power grid had just failed

• Biden had just taken office

• Trump had just been impeached… for a second time

• The US had just finished the second round of stimulus payouts with a third right around the corner

• Business is booming

• You’re not in credit card debt

Amongst all of that… BTC is taking off.

What Was Fueling Bitcoin Then?

Notably, it’s important to state that when bitcoin first crossed $50,000, it was pure chaos. It was a time of media frenzy, high-profile endorsements, and institutional first-movers.

For context, this was right around when Gamestop (GME) was up 8,500% after the Wall Street Bets crowd squeezed the institutional shorts. ☠️

Anyway, here were the big stories coming out back then, according to our archives:

• The NFT market was just taking off, with the value of crypto art surpassing $100 million for the first time.

• Elon publicly commented on bitcoin for the first time ever. Remember? He changed his Twitter bio to “#bitcoin” and the price popped. One week later, Tesla bought $1.5 billion in bitcoin, and set plans to accept it as payment. It was a “historic” moment.

• Coinbase had just announced that it will go public by way of a direct listing on the NASDAQ, rather than the traditional IPO process.

• Companies like Square (SQ) and Marathon Digital (MARA) were making their first announcements of adding BTC to their balance sheet. This was right around the time Michael Saylor started hosting conferences to teach other C-level executives how to put BTC on their balance sheet.

• Mastercard was giving merchants the option to receive payments in cryptocurrency without the need to settle in fiat.

• And the launch of CME's ether (ETH) futures marked a significant milestone in crypto derivatives.

Now, there were a lot of other notable “catalysts” to dig into here… DeFi was taking off around that same time as well, for example, but hopefully that gives you a good picture.

What's Fueling Bitcoin Now?

As always it’s hard to say what exactly moves the price, but here are the ongoing catalysts that are likely contributing:

1. Over $2 Billion has flowed into ETFs
With GBTC outflows shrinking by the day, we’ve now seen 13 straight days of net inflows. BlackRock and Fidelity are still leading the charge, adding a combined $3 billion-plus to their funds. This has made them the two most successful ETF launches in history.

This type of demand shouldn’t be ignored. The ETFs are now buying up ~12.5x more BTC per day than the daily issuance.

2. The Bitcoin halving is approaching.
Meanwhile, as the Bitcoin halving nears, supply on exchanges has fallen to a level we haven’t seen since 2018. And we all know what happens when a decreasing supply meets increasing demand…

3. Growing institutional interest
Institutions are increasingly integrating bitcoin into their portfolios. Fidelity, for example, recently included its spot bitcoin ETF to one of their “All-In-One” portfolio funds, giving their investors a 1-3% allocation to bitcoin.

Imagine what happens when this becomes the norm. 

4. Macro factors
Federal Reserve Chair Jerome Powell’s recent comments about the unsustainable fiscal path of the U.S. and impending money printing might be giving investors some signal. Historically, Bitcoin prices have responded positively to increases in the global M2 money supply.

As we rip past $50,000, that pretty much sums up today’s bitcoin catalysts…

What’s The Difference?

Overall, there’s much less hysteria today than there was when we first crossed $50,000. This was evident not only in the all the splashy headlines, but by the volatility.

Back then, the price of bitcoin went from ~$32,000 to $59,000 in less than a month.

Today, it’s been much more of slow and steady grind.

Back then, it was a whirlwind of retail interest and sensational announcements.

Today, the landscape is calmer, with institutional investments and macroeconomic factors guiding bitcoin's path.

The big question: Does the quieter, more matured market of today hold more weight than the splashy headlines of yesterday? It's hard to say definitively. But one thing is clear: the current Bitcoin surge feels more grounded in real market dynamics than in fleeting media hype.

And that’s something to hang our hats on.

I’ll take bitcoin casually crossing $50k without much fanfare over Elon Musk dogecoin-fueled pumps any day of the week.

Anyway, in 2021, the year bitcoin last hit $50,000, the popular cryptocurrency also reached its all-time high of around $69,000.