The price of bitcoin (BTC) soared past $63,000 on Wednesday, reaching levels not seen in more than two years and nearing an all-time high, driven by massive inflows into spot Bitcoin ETFs.
Bitcoin rallied 11% to $63,600, its highest since the last bull run of November 2021, helped in part by MicroStrategy’s disclosure on Monday, Feb. 26, that it had bought an extra 3,000 BTC for $155 million.
Over the past week, bitcoin has gained 24% in value and 170% year-to-date, CoinGecko data shows. The original cryptocurrency has added over $800 billion in market cap since Jan. 1, climbing to $1.25 trillion, making it the tenth largest asset in the world.
Bitcoin ETFs, halving drive prices
The price rally is largely driven by surging interest in spot Bitcoin exchange-traded funds (ETFs), which were recently approved for trading in the U.S. by the Securities Exchange Commission.
According to Bloomberg senior ETF analyst Eric Balchunas, the nine funds have accumulated 300,000 BTC, or 1.5% of the total bitcoin supply, since they started trading the asset on Jan. 11. On Monday and Tuesday alone, the funds added a total of 22,000 BTC.
All the ETFs are seeing record daily net inflows, with BlackRock‘s IBIT taking in $1.51 billion of the $2.6 billion sector total on its own Wednesday afternoon. Balchunas described the amount of money pouring into the Bitcoin funds as “absurd, highly rare stuff.”
JEEZ: Only halfway through trading day and New Nine bitcoin ETFs have already broken their all time daily volume record w/ $2.6b. We got 4 btc ETFs in Top 20. $IBIT is #4 overall, it's gonna trade more today than in its first two wks combined. This is officially a craze. pic.twitter.com/Wqez1rKrCg
— Eric Balchunas (@EricBalchunas) February 28, 2024
Another key incentive behind the rally is the Bitcoin halving that is coming in April. The event, which takes place every four years, will reduce the supply of bitcoin, cutting the reward paid to miners for producing the tokens by 50%.
A maximum of 21 million bitcoins could ever enter into circulation, of which 19 million have already been mined. Halving events have historically propelled a bull run due to a real or perceived scarcity of supply.
Also read: Bitcoin ETF Gets Green Light Despite Initial SEC Miscommunication
“With the Bitcoin halving just 53 days away, hitting a new all-time high before it happens would be a first in Bitcoin’s history,” Alex Onufriychuk, crypto advisor and entrepreneur, told MetaNews.
“Investment firms for the Bitcoin ETFs are absorbing a larger amount of bitcoin than miners can supply. That builds additional confidence among average investors.”
Markets rise
The price of bitcoin rocketed 8,000% after the 2012 halving, and in 2016, it dropped initially before ending the year up 285%. One year after the 2020 halving, BTC rose 540%, according to Robert Quartly-Janeiro, the chief strategy officer at crypto exchange Bitrue.
But Janeiro is not so sure about this year’s halving and the impact it could have on prices in the short to medium term.
“At $60K in 2024, it would be eye-opening to see the price increase by as much as 200%,” he tells us.
“But if the historic trend is anything to go by, then it cannot be ruled out, especially when you add in the ETF factor.”
As of writing, bitcoin had pared some of its gains and was up 6% to $60,089 over the past 24 hours. The asset has seen some huge gains this February, rising from $51,000 only a few days ago and is now chasing its record high of $69,000 reached on Nov. 10, 2021.
$BTC is in price discovery phase. Maybe really for the first time since it’s been an asset as now the bulk of US wealth has easy access. Hard to predict where we stop.
— Mike Novogratz (@novogratz) February 28, 2024
Apart from bitcoin, other cryptocurrencies are also trending up. Ethereum, the second largest crypto asset, is trading for $3,301, up about 20% over the past two weeks and 102% since Jan. 1.
Top gainers on Wednesday included Airweave, which rose above 40% to $24.62, and TON, which added 22% to $2.33 after Telegram announced it would start sharing ad revenue with channel owners.
Overall, the total crypto market capitalization reached $2.2 trillion, up more than 3% on the day.
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