Bitcoin soars $60k on FOMO-fuelled rally
Bitcoin surged on Wednesday, nearing $60,000 in its fifth day of gains fueled by investments in new US spot bitcoin exchange-traded products, marking its biggest monthly rally since December 2020, according to Reuters.
Bitcoin has surged 4.5 per cent to $59,244, its highest value since December 2021, as investors flock to the cryptocurrency in anticipation of April’s halving event, which aims to slow down the creation of new bitcoins.
Furthermore, the potential for a series of rate cuts by the Federal Reserve this year is stimulating investors’ interest in assets that offer higher yields or greater volatility.
Ben Laidler, a global markets strategist at eToro, explains that the consistent inflows into new spot exchange-traded funds’ (ETF), the anticipation of Bitcoin’s halving event in April, and the potential Federal Reserve interest rate cuts in June are all driving factors for Bitcoin’s current performance.
This month, the total value of circulating bitcoin exceeded $2 trillion for the first time in two years, according to CoinGecko.
Concurrently, the cryptocurrency’s price has doubled in just four months, and there’s been a significant uptick in interest in the larger bitcoin ETF this week.
The trading volumes of the three most popular funds, managed by Grayscale, Fidelity, and BlackRock, have experienced a significant increase.
On Monday and Tuesday, approximately 110 million shares from these three funds were traded, making up about 51 per cent of the 215 million shares traded in the market’s most valuable companies, Apple, Microsoft, and Nvidia, as per LSEG data.
This is a substantial increase from three weeks ago, when this percentage was around 15 per cent.
Joseph Edwards, the head of research at Enigma Securities, explains that the ETF effect is happening earlier than expected.
He attributes this to the rapid and sustained inflows into ETFs, which he believes reflect the quick actions of advisors who have started selling the ETFs to their clients.
LSEG data reveals a $420 million inflow into the top 10 bitcoin ETFs on Tuesday, marking a two-week high. MicroStrategy and Reddit have recently invested in bitcoins and ether.
Ether, the world’s second-largest cryptocurrency, rose 2.2 per cent to $3,320, achieving a two-year high and a 47 per cent increase in February. Investors are hopeful for US approval of spot ether ETFs. According to Edwards, the market is stable with a hint of FOMO-influencing purchases.
