Bitcoin nears $60K in historic monthly surge

Bitcoin's price surged for the fifth consecutive day on Wednesday, approaching $60,000, fueled by significant inflows into new U.S. spot bitcoin exchange-traded products (ETPs).

Publication: 28.02.2024 - 15:20
Bitcoin nears $60K in historic monthly surge
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These inflows have driven the cryptocurrency's value up nearly 40% in February, marking its largest monthly rally since December 2020. As of the last update, Bitcoin was trading up 4.5% at $59,244, reaching its highest point since November 2021.

Investors have been flocking to Bitcoin in anticipation of April's halving event, a mechanism designed to reduce the rate at which new coins are generated. Moreover, the possibility of the Federal Reserve implementing a series of interest rate cuts this year has heightened investor interest in higher-yielding or more volatile assets.

"Bitcoin's momentum is supported by steady inflows into the new spot ETFs, the upcoming halving event in April, and expectations for the Fed's interest rate cuts in June," stated Ben Laidler, a global markets strategist at the retail investment platform eToro.

This month, the total value of all circulating Bitcoin surpassed $2 trillion for the first time in two years, CoinGecko reports. In just four months, the price of Bitcoin has doubled.

Interest in the larger Bitcoin ETFs has spiked this week. The three most popular, managed by Grayscale, Fidelity, and BlackRock, have experienced a surge in trading volumes. Over Monday and Tuesday, approximately 110 million shares in these three ETFs were traded, accounting for about 51% of the total shares traded in the market's most valuable companies, such as Apple, Microsoft, and Nvidia, according to LSEG data. Just three weeks ago, this figure was closer to 15%.

"We're witnessing the ETF effect sooner than expected. Inflows into these ETFs accelerated last week and have maintained momentum, reflecting advisors' swift action in promoting these ETFs to their clients," explained Joseph Edwards, head of research at Enigma Securities.

LSEG data revealed that the 10 largest spot Bitcoin ETFs saw inflows of $420 million on Tuesday alone, the highest in nearly two weeks.

In other cryptocurrency news, MicroStrategy disclosed earlier this week that it had purchased about 3,000 bitcoins for $155 million. Additionally, Reddit announced in a regulatory filing that it had acquired small amounts of bitcoin and ether.

Ether, the world's second-largest cryptocurrency and the backbone of the Ethereum blockchain network rose 2.2% to $3,320, reaching another two-year high earlier in the day. February saw the price of Ether increase by 47%, its most significant monthly gain since a 70% rally in July 2022. Investors are now hopeful that U.S. regulators will green-light applications for ETFs based on spot Ether.

"The market's upward trajectory feels reasonably stable," Edwards commented. "There's a sense of FOMO among investors, but the buying is not frenzied. Ether's gains, in particular, suggest a more measured market environment."