Bitcoin hits $57,000 mark, the highest in two years on strong ETF inflows
Bitcoin reached its highest point in over two years, reaching $57,000 on February 26. The cryptocurrency rose 9 percent to briefly touch the $57,000 milestone – its first time since November 2021, before dropping back down to around $56,500 levels, CoinDesk reported. The rise is being driven by increasing optimism about sustained investor demand through exchange-traded funds (ETFs), Bloomberg reported.
During the day-long rally, Bitcoin first pushed the $53,000 milestone before quickly climbing to $54,000, $56,000 and then $57,000 in quick succession.
Rally Triggered by Institutional Allocation, says Experts
Bitcoin is now up more than 200 percent from its previous bottom levels in November 2022 and after the FTX fiasco, noted Zakhil Suresh, CEO of crypto investment platform BitSave. “This rally has been primarily triggered by institutional allocation and the increased retail participation in the last few months due to Bitcoin Spot ETF applications in the US and upcoming Bitcoin halving,” Suresh said.
“Digital asset investment products saw weekly inflows totalling $598 million last week, according to Coinshares, marking the fourth consecutive week of inflows. Bitcoin saw $570 million inflows last week, bringing year-to-date inflows to $5.6 billion,” he noted.
On the market movements, Suresh said that even though prices started dropping immediately after 11 spot ETFs were approved by the SEC last month, owing to profit-booking by early investors, Bitcoin found support below $40,000 which also coincided with 100 Day Moving Average.
“AUM of all Bitcoin spot ETFs combined have crossed $39.40 billion according to Coinglass. Bitcoin is now the second largest ETF commodity in the US, surpassing Silver which has $11.5 billion in AUM. Fresh inflows from institutions have helped Bitcoin maintain its bullish trend,” he noted.
Further, Suresh said that an important level to cross right now for Bitcoin is the $60,000 resistance to continue its uptrend going into halving.
Spencer Hallarn, the global head of over-the-counter trading at crypto investment firm GSR, told the publication that the cryptocurrencies‘ ascent, is “supported by strong ETF inflows”.
Earlier, the world’s largest cryptocurrency saw a rise of up to 3.5 percent, reaching $53,600, Bloomberg reported. The last time Bitcoin traded at this level was in December 2021 when it achieved an all-time high of almost $69,000 the preceding month.
In the past month, investors have allocated over $5 billion across nine newly launched ETFs. This amount considers the $7.4 billion withdrawn from the Grayscale Bitcoin Trust, which underwent conversion from a trust during the same period.
Market Dynamics Fuel Bitcoin’s Rise
“Bitcoin is approaching new yearly highs off the back of increased spot demand and momentum traders taking positions after a week of consolidation,” Chris Newhouse, a DeFi analyst at Cumberland Labs told Bloomberg. Despite the rise, liquidations are not excessively high for the current price action, with leveraged longs quickly replacing liquidated shorts.
Newhouse pointed out a noticeable increase in the open interest, or outstanding contracts, for perpetual Bitcoin futures. Simultaneously, short positions have been compelled to close during the latest rally, potentially due to fresh long positions entering the market.
MicroStrategy Boosts Confidence with Large Bitcoin Purchase
MicroStrategy Inc., known for integrating Bitcoin into its corporate strategy, announced the acquisition of approximately 3,000 cryptocurrency tokens this month for $155.4 million. With a total Bitcoin holding of around $10 billion, this move has added to the positive sentiment surrounding Bitcoin.
Following the announcement, shares of MicroStrategy surged around 14 percent. Other crypto-related stocks also experienced rallies, with Coinbase Global rising 14 percent, and Bitcoin miner Marathon Digital witnessing an almost 20 percent jump.
(With inputs from Bloomberg)
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Published: 27 Feb 2024, 06:32 AM IST
