Bitcoin rises back to $50,000 on institutional demand

beginning of September, Bitcoin fell below $50,000 amid a broad selloff in stocks of cryptocurrency and blockchain-related companies. It continued to fall in September, reaching a low of $40,596 on September 21st.

On Tuesday, Bitcoin rose to $50,808.25. It was last up 2.6% to $50,498.

Smaller coins, which tend to move in parallel with Bitcoin, were also up. Ether rose 1.5% to $3,434 and XRP rose 2.2% to $1.0656.

Market participants cited the increase in institutional crypto services from banks and financial institutions to meet rising investor demand as a factor driving Bitcoin's rise.

On Tuesday, US Bancorp announced that it has launched a cryptocurrency custody service for institutional investment managers that have private funds in the United States and the Cayman Islands.

On Monday, Bank of America Corp released its first research report on cryptocurrencies and other digital assets, as other mainstream financial institutions increase their exposure to the asset class.

“The banks are capitulating one by one,” says Martha Reyes, head of research at Digital Asset Prime Brokerage and Exchange BEQUANT. “For those of us who work in space, the fact that it is too big to ignore is hardly news, and regulators are certainly not ignoring it.”

Investment inflows into the sector have been robust, apart from a few slow months in the summer.

Cryptocurrency investment products and funds posted inflows for the seventh straight week as institutional investors warmed to more supportive statements from regulators, data from digital asset manager CoinShares showed on Monday.

Specialist crypto tracker and research provider CoinDesk published a market overview on Tuesday showing a 25% gain for Bitcoin and 32% for Ether in the third quarter.

The report also cited the rise of non-fungible tokens (NFTs), which use blockchain to record ownership of digital items such as images, videos, collectibles and even land in virtual worlds.

NFT sales rose to $10.7 billion in the third quarter.

Kraken Intelligence, a research blog from crypto exchange Kraken, noted in its September report on Tuesday that headwinds for Bitcoin in September "appear to have positioned the market to rally higher in and throughout the fourth quarter." It added that the fourth quarter is Bitcoin's historically best quarter, with an average and median return of 119% and 58%, respectively.

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(Reporting by Gertrude Chavez-Dreyfuss in New York and Ritvik Carvalho in London; Editing by Rachel Armstrongm Will Dunham and David Gregorio)