Bitcoin hit $60,000 on Wednesday for the first time in more than two years, as a flurry of capital into new US spot bitcoin exchange traded products fuelled a 42% price rally in February, which would mark its largest monthly gain since December 2020.
Bitcoin was last up 6% at $60,131, its highest since November 2021, when it hit a record just below $70,000. Bitcoin was also heading for its largest week-on-week gain in a year, up 18.5% since February 21.
Traders have poured into bitcoin ahead of April’s halving event – a process designed to slow the release of the cryptocurrency. In addition, the prospect of the Federal Reserve delivering a series of rate cuts this year has fed investor appetite for higher-yielding or more volatile assets. “Bitcoin is being driven by the support of consistent inflows into the new spot exchange-traded funds (ETFs) and outlook for April’s halving event and June’s Fed interest rate cuts,” Ben Laidler, global markets strategist at retail investment platform eToro, said.
The value of all the bitcoin in circulation has topped $2 trillion this month for the first time in two years, according to crypto platform CoinGecko, while the price of the token itself has doubled in just four months.
The bigger bitcoin ETFs have seen a definite pickup in interest this week.
The three most popular, run by Grayscale, Fidelity and BlackRock, have seen trading volumes surge.
On Monday and Tuesday, around 110 million shares in the biggest three changed hands, about 51% of the 215 million shares traded in the market’s most valuable companies – Apple, Microsoft and Nvidia, according to LSEG data.
Read Bitcoin market cap crosses $1 trillion as buyers flood in
Three weeks ago, this percentage was closer to 15%.
“Essentially, we’re seeing the ETF effect ahead of schedule. Inflows into them stepped up quickly last week and have been sustained, and we think it’s reflective of advisors getting out there very quickly to start selling the ETFs to clients,” Joseph Edwards, head of research at Enigma Securities, said.
LSEG data showed flows into the 10 largest spot bitcoin ETFs brought in $420 million on Tuesday alone, the most in almost two weeks.
“If $60,000 doesn’t whet the appetite, consider that 70% of bitcoin supply has remained unmoved for a year, and the little that’s left is being hoovered up by the likes of BlackRock and Fidelity, just as rewards for miners are about to be slashed in half. The stars are aligning for bitcoin,” cofounder of Nexo crypto exchange Antoni Trenchev said.
Published in The Express Tribune, February 29th, 2024.
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