Early on Monday, March 4, the price of Bitcoin (BTC) briefly crossed the $64,000 mark in the Asian market.
The world’s largest cryptocurrency by market cap rose to as much as $64,279 – its highest valuation since November 2021 – before dropping to the $63,500 range.
The latest surge was driven by daily open interest for Bitcoin futures on centralized exchanges hitting an all-time high of $27.53 billion in Asia. This was an indication of traders betting on the insatiable demand for the spot Bitcoin exchange-traded funds (ETFs), which began trading in the US on January 11.
Bitcoin Hits $64,000 as Traders Bet on the Performance of Bitcoin ETFs in the US Market
Their launch opened up a new way for institutional and retail investors to get exposure to Bitcoin without having to deal with the cumbersome process of buying and holding the crypto asset.
The investment vehicles have re-ignited a level of enthusiasm and momentum for the apex cryptocurrency that has not been observed since it hit an all-time high (ATH) of $69,000 over two years ago.
Hayden Hughes, the co-founder of social trading platform Alpha Impact, said that given the low liquidity over the weekend, the markets were moving in anticipation of the spot Bitcoin ETF inflows to continue, which will lead to BTC prices continuing to rally.
The spot Bitcoin ETFs have seen a tremendous increase in assets under management (AUM). Last week, $9 trillion investment manager BlackRock’s iShares Bitcoin Trust ETF (IBIT) hit $10 billion in total AUM.
As of March 1, the cumulative volume for spot Bitcoin ETFs amounted to $73.91 billion, compared to $29.19 billion recorded on February 1. The 10 funds issued by firms including BlackRock, Fidelity, Grayscale, VanEck, Valkyrie, Ark Invest, Invesco Galaxy, WisdomTree, Bitwise, and Franklin Templeton have received net inflows of $7.35 billion since their debut.
Bitcoin’s Price Surges Over 50% in 3 Months, but Traders Want it to Hit ATH Pre-Halving
Bitcoin has gained over 50% in market value since the turn of the year and most of it can be attributed to the last few weeks when the trading volume for spot BTC ETFs surged. The apex cryptocurrency is up 186% in value over the last 12 months, and down only 7% on its ATH.
Traders are betting on Bitcoin’s price to soon cross the $69,000, given the strong demand for the digital asset through ETFs, but want it to happen before the halving event on the Bitcoin network when the reward for mining a block is cut in half.
The once-in-four-year event, scheduled for the second half of April, is designed to reduce the supply growth of BTC as demand continues to rise.
Hughes also noted that it may take a while before Bitcoin crosses its “psychological threshold” of the previous all-time high, but it should be considered a matter of time due to the positive market sentiment created by the ETFs and the upcoming halving.
Since block rewards form a majority of miners’ revenue, the halving could negatively impact their profitability and lead to a higher production cost for Bitcoin, which could cause BTC prices to decline, according to a report by JPMorgan analysts.
Bitcoin Back to Where It Was in 2021
Brent Donnelly, president of market analysis firm Spectra Market, said that in a world where the tech-heavy Nasdaq is making new all-time highs, crypto will surely perform well as Bitcoin remains a “high-volatility tech proxy and liquidity thermometer”. He also added that the market is back to where it was in 2021 where everything is going up and “everyone is having fun”.
At the time of writing, Bitcoin (BTC) is trading at $63,302 – up 2.2% in the last 24 hours.
