Bitcoin tops $51,000, moving firmly higher for the first time in 2 weeks as it heads into the holiday
- Bitcoin topped $51,000 Friday as the cryptocurrency moved firmly higher for the first time in two weeks.
- The cryptocurrency's break through $50,000 signals a "Santa Claus rally" to end the year on a high note.
- Investors' appetite for riskier assets is returning as worries about the faster Fed taper and Omicron fade.
Bitcoin extended its gains above $50,000 on Friday, matching the upbeat tone in broader financial markets as investors shook off Omicron fears to kick off the holidays.
Going into the last week of December, cryptocurrencies, like other risky assets, appear to be shaping up for a so-called "Santa Claus rally" for a strong end to the year.
Leading cryptocurrency bitcoin broke through $50,000 late Thursday, having been stuck below the psychological level for two weeks. It was trading 5% higher at $51,191 at last check Friday, according to data from CoinGecko.
Investors have faced a wall of worry this month over the impact of the Federal Reserve's decision to wind down support for the US economy and of the rapid spread of the Omicron coronavirus variant.
These fears fed into the cryptocurrency market too, which weighed on prices for bitcoin and other coins.
Analysts said crypto assets lost ground after the Fed's December meeting, where officials confirmed expectations they will double the pace of tapering bond purchases in a bid to combat high inflation.
But investors appear to be letting go of those concerns and turning back to riskier assets, such as stocks. On Thursday, the S&P 500 closed at a record high to end the trading week, as US equity markets are closed Friday for the holiday.
Reflecting the mood, cryptocurrencies rose across the board Friday. Ether was up 4% at $4,106, while cardano's ada added 8% to reach $1.45.
Some altcoins have made big moves, too — in particular, Terra's luna, which hit a record high of $100.84 on Friday after logging gains of over 30% earlier in the week.
The overall crypto market captured mainstream interest in 2021, with demand from consumers and retailers shooting up. More than half of bitcoin users in the US got in only this year, and most are still holding their positions, a Grayscale study found.
The leading cryptocurrency by market value is up 76% for the year so far, though it is still 25% below its record high of about $69,000 in November.
As for next year, trends suggest bitcoin's rise is only set to continue. Crypto exchange Coinbase said in a blog this week that while advocates believe bitcoin is a rival to other digital currencies, nothing remotely competes with the token.
"Bitcoin will see a new wave of buyers," Philip Gradwell, chief economist at Chainalysis, said in a note. "The big question is whether the institutions that entered in Q4 of 2020 and Q1 2021 — the majority of recent, new institutional buyers — decide to sell to this next wave."
"If so, then the price pressure will be muted as new demand is balanced by their sales," he added.
"But if everyone continues to hold, then price pressure could increase significantly, given the supply of bitcoin that is readily available to buy is at historical lows."