Bitcoin Surges Towards All-Time High on Robust Demand for ETFs
Bitcoin, the largest cryptocurrency, is experiencing a remarkable rally as it surges towards its all-time high. This upward trajectory is driven by the strong demand for exchange-traded funds (ETFs) at the start of the week. The price of Bitcoin rose to as much as $65,010, marking its first move above $65,000 since November 2021. Although it has since trimmed back to $64,917, the momentum remains strong.
At the center of this frenzy for Bitcoin lies the seemingly insatiable demand from US-listed Bitcoin ETFs, which began trading on January 11. Over the past 12 months, Bitcoin has seen a staggering jump of about 186%. Since the debut of these ETFs, there have been net inflows of $7.35 billion from major fund names such as BlackRock Inc. and Fidelity Investments. Even significant outflows of nearly $9 billion from Grayscale Bitcoin Trust have not deterred traders.
Hayden Hughes, co-founder of social-trading platform Alpha Impact, explains that the anticipation of continued ETF inflows and price rallies is driving the market upwards. With low liquidity over the weekend, traders are betting on Bitcoin’s price to surpass its previous record of almost $69,000, reached during the Covid pandemic in November 2021. This strong demand is further fueled by the looming Bitcoin halving expected in April this year. After halving, which involves cutting the reward for mining in half, the supply growth of Bitcoin could decrease, intensifying the demand squeeze.
The surge in Bitcoin’s price has also had a positive impact on other cryptocurrencies known as altcoins. Cardano and Solana, two popular altcoins, saw increases of 8% and 1% respectively on Monday. Additionally, meme coins, such as Dogecoin and Shiba Inu, experienced significant gains of nearly 20% and 34% in the last 24 hours. Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets, compares this situation to the 2021 bull run, with retail traders seeking quick profits from volatile tokens.
The bullish outlook for cryptocurrencies is further supported by the trading in crypto derivatives. Open interest at Chicago-based CME Group’s Bitcoin and Ether futures market is just 1.8% away from their respective record highs. This increase in outstanding contracts indicates a growing interest in crypto-related exposure and hedging among US institutions.
Caroline Mauron predicts that the all-time highs in Bitcoin will be tested in the short-term, with the crucial resistance level of $70,000. As Bitcoin continues its rally, investors are closely watching the market and eagerly anticipating further price increases.
In conclusion, Bitcoin’s surge towards its all-time high is driven by the robust demand for ETFs. The anticipation of continued inflows and price rallies, along with the upcoming Bitcoin halving, has created a sense of urgency among traders. This bullish sentiment has also extended to altcoins and meme coins, which have experienced significant gains. With the market showing strong resistance levels, the future of Bitcoin remains uncertain but promising.