Bitcoin surged to an all-time high surpassing $69,000, driven by increased accessibility for trading and constrained supplies of the world’s largest cryptocurrency, on Tuesday. The price of Bitcoin soared to $69,191.94, surpassing its previous record of $68,991 set in November 2021.
This surge was propelled by investors channeling funds into U.S. spot exchange-traded cryptocurrency products and the anticipation of potential declines in global interest rates.
Following the approval of 11 spot Bitcoin ETFs by the Securities and Exchange Commission in late January, investor interest has surged. However, the market subsequently experienced a downturn, with Bitcoin trading lower. Presently, Bitcoin is priced at $68,440.
Also read: Bitcoin surge: Why should you still not invest in cryptos? These are 7 key reasons
Bitcoin’s staggering surge of almost 160% since October, with a remarkable 44% spike occurring solely in February, presents a stark juxtaposition to the crypto winter of 2022. During that period, the market endured an 18-month-long downturn characterized by notable corporate bankruptcies and scandals.
The resurgence of Bitcoin, along with the broader crypto market, can be attributed not only to increased demand from a more diverse investor base but also to the anticipation of the Federal Reserve’s potential decision to reduce U.S. interest rates. Such moves often lead investors to redirect capital towards assets offering higher yields or exhibiting greater volatility.
“The market is witnessing a notable resurgence, with Bitcoin’s price reaching towards its record highs, accompanied by a significant influx of institutional investment, which are the primary catalysts for this upward trend. While meme coins are experiencing a transient upswing fueled by FOMO, the true drivers of this rally remain established players like Bitcoin and Ethereum, which are attracting robust demand from major investors,” said Sumit Gupta, co-founder, CoinDCX.
Gupta further added, “The introduction of exchange-traded funds (ETFs) is fundamentally altering the market landscape by providing a more accessible and secure avenue for individuals of diverse financial backgrounds to participate in the crypto ecosystem. These investment vehicles are unlocking significant latent demand for crypto, as evidenced by the rapid growth of BlackRock’s bitcoin ETF. This particular fund has reached $10 billion in assets under management within such a short timeframe, with projections suggesting that the next $10 billion could be accumulated even faster. These developments strongly suggest that institutional adoption is playing a pivotal role in propelling the current crypto rally.”
Also read: Crypto trading reaches 10-month high in India: Report
This year, investors have shown a keen interest in cryptocurrencies, mega-cap technology stocks, and investment-grade corporate bonds, especially. Analysts suggest that bitcoin, in particular, has seen significant traction leading up to April’s anticipated halving event. This event, occurring every four years, involves a reduction in the rate at which tokens are released, along with the rewards granted to miners.
The total supply of bitcoin is capped at 21 million, with approximately 19 million already mined, according to reports. Despite its recent surge in popularity, many investors remain wary of bitcoin due to its high volatility and perceived lack of substantial real-world applications beyond speculative investment.
However, amidst a mix of factors such as increased inflows into Exchange-Traded Funds (ETFs), the anticipation of limited bitcoin supply, and potential future declines in U.S. interest rates, some companies are diversifying their corporate holdings by adding cryptocurrencies to their portfolios.
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Published: 05 Mar 2024, 09:07 PM IST