Bitcoin Hits $60,000 as ‘FOMO’ Rally Gathers Pace
Bitcoin reached a significant milestone, hitting the $60,000 mark on Wednesday for the first time in over two years. This surge is attributed to a whirlwind of capital entering new U.S. spot bitcoin exchange-traded products (ETFs), resulting in a 42% price rally in February alone. This notable gain marks the cryptocurrency’s most substantial monthly increase since December 2020.
As of the latest update, Bitcoin’s value had climbed 6% to $60,131, reaching heights not seen since November 2021, when it almost touched the $70,000 mark. Moreover, Bitcoin is on track to secure its largest week-on-week gain in twelve months, boasting an 18.5% rise since February 21.
The influx of traders into Bitcoin comes in anticipation of April’s halving event, a mechanism designed to decelerate the release of the digital currency. Additionally, the potential for the Federal Reserve to implement a series of rate cuts this year has further fueled investor interest in high-yield or volatile assets.
“Bitcoin is being driven by the support of consistent inflows into the new spot ETFs and the outlook for April’s halving event and June’s Fed interest rate cuts,” outlined Ben Laidler, a global markets strategist at the retail investment platform eToro.
Currently, the total value of all circulating Bitcoin has surpassed $2 trillion this month for the first time in two years, according to data from crypto platform CoinGecko. Notably, the price of Bitcoin itself has doubled in just four months.
The surge in interest in Bitcoin ETFs has been particularly pronounced. The three leading ETFs, managed by Grayscale, Fidelity, and BlackRock, have witnessed a significant increase in trading volumes.
In the early part of the week, approximately 110 million shares changed hands between the biggest three ETFs, accounting for about 51% of the trading volume across highly valued companies like Apple, Microsoft, and Nvidia, based on LSEG data. This marks a notable increase from just 15% three weeks prior.
“Essentially, what we are witnessing is the ETF effect materializing ahead of schedule,” Joseph Edwards, head of research at Enigma Securities, commented. “The sustained inflow into these ETFs indicates a rapid mobilization by advisors to present these options to clients.”
According to LSEG figures, inflows into the ten largest spot bitcoin ETFs reached $420 million on Tuesday alone, marking the highest in nearly two weeks.
“If the $60,000 mark does not capture investor interest, it’s worth noting that 70% of Bitcoin supply has remained stationary for a year, and the remaining supply is being rapidly absorbed by entities like BlackRock and Fidelity, just as mining rewards are set to halve. For Bitcoin, the stars are aligning,” Antoni Trenchev, cofounder of the Nexo crypto exchange, remarked.
Earlier this week, crypto investor and software company MicroStrategy disclosed a recent purchase of approximately 3,000 bitcoins valued at $155 million. Similarly, social media platform Reddit reported minor acquisitions of bitcoin and ether in a regulatory filing.
Meanwhile, ether, the second-largest cryptocurrency and the backbone of the ethereum blockchain network, experienced a 3.2% increase to $3,353, having peaked at another two-year high earlier in the day. February saw a 47% rise in ether’s value, marking its most significant monthly gain since a 70% rally in July 2022. With growing anticipation surrounding U.S. regulators’ potential approval of spot ether ETF applications, the crypto market’s upward trajectory appears more stable than frenetic.
“Even though there is a hint of FOMO in the air, the overall sentiment towards buying and investment seems reasonably steady, with ether’s performance further indicating a balanced market environment,” Edwards concluded.
