(Bloomberg) — At the heart of the bull market that is pushing Bitcoin toward all-time highs is a simple economic principle: supply and demand.
Most Read Articles on Bloomberg
Demand for the token from U.S. exchange-traded funds (ETFs) is outpacing the amount of Bitcoin that long-term holders are willing to sell. This has ignited the crypto market, attracting momentum-hungry traders and prompting speculators to close out bearish bets as leveraged bets for further gains increase.
In a wild 24 hours for the crypto market, Bitcoin rose as much as 13% on Wednesday to $63,968, the first time it has topped $60,000 since November 2021. It was then trading at $61,300 in Singapore as of 10:30 a.m. Thursday, after paring out some of the gains. Along the way, Coinbase, a major digital asset exchange in the United States, suffered an outage due to a spike in traffic and eventually restored service.
Bitcoin has already surged more than 40% this year, on top of the successful debut of a US ETF that directly owns the token. A series of funds from BlackRock, Fidelity Investments and others began operations on January 11 and have attracted nearly $7 billion in net inflows to date. At current levels, the token is eyeing a pandemic-era record of $68,991.85, making it a bullish outpost as hopes for monetary easing fade and caution prevails in global markets.
Bitcoin halving
Despite ongoing debate over how much of an impact this event will actually have on the price outlook, the upcoming halving, when Bitcoin's supply growth will decline, is likely to further boost the upbeat mood. ing.
“The optimism for Bitcoin is being driven by several factors working together: spot BTC ETF inflows in the US, a decline in new Bitcoin issuance in the coming period known as the halving; and an overall renewed sense of optimism for the crypto asset class as a whole.” Jonathon Miller is the Managing Director of the Kraken Australia Digital Asset Exchange.
Read next: Why big banks are doubling down on cryptocurrencies
Bitcoin's value has more than tripled since the beginning of last year, rebounding from a 64% plunge in 2022. This is a remarkable comeback from a series of scandals and bankruptcies that had called into question the viability of cryptocurrencies.
“It’s pretty crazy,” said Ryan Kim, head of derivatives at digital asset prime brokerage firm FalconX.
win stocks
Bitcoin is set to outperform traditional assets like stocks and gold in 2024, providing a platform for volatility for opportunistic traders.
Industry insiders are warning of tight supply following the influx of funds into Bitcoin ETFs. Roughly 80% of Bitcoin's supply has been idle for the past six months. The nine new spot ETFs contain more than 300,000 Bitcoins, which is seven times the amount of new coins mined since January 11th.
After the halving, expected in late April, the number of new coins mined each day will drop from the current 900 to 450. Proponents predict that if demand remains constant, prices have room to rise.
“We're starting to see a pretty clear FOMO-like uptrend,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “More and more people are convinced and are buying it.”
The speed of its progress has some observers warning of the boom-bust cycles that cryptocurrencies have become emblematic of. For example, Bitcoin has fallen below $15,500 about a year after hitting an all-time high in November 2021.
Jaime Baeza, founder of CryptoHedge, said: “This move is very sudden and leverage is very high at the moment, as derivative standards and funding rates suggest, leading to a sharp correction of more than 20%. I wouldn't be surprised.” Fund AnB Investment. “Still, I have no intention of shorting this rally as long as it continues to rise at this pace.”
–With assistance from Muyao Shen, Yueqi Yang, and Suvashree Ghosh.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
