Due to ETF demand, Bitcoin Rises and Temporarily Crosses $64,000 For the First Time in 27 Months
Bitcoin is soaring to all-time highs due to supply and demand, a fundamental economic theory. The surge in demand brought forth by recently launched exchange-traded funds (ETFs) has caused an extraordinary rise, beyond the desire of long-term Bitcoin holders to sell. The result has been a wildfire in the cryptocurrency market, with traders taking advantage of the rising momentum to cover short positions and place leveraged bets on the market’s ability to continue rising.
The craze peaked on Wednesday when Bitcoin shot up to $63,968, a whopping 13% increase. This was the first time the price has broken $60,000 since November 2021. The biggest US digital asset exchange, Coinbase, had trading disruptions and displayed $0 balances for its customers due to an increase in traffic, which dampened the enthusiasm.
The successful introduction of US exchange-traded funds, which have drawn over $6 billion since their trading debut on January 11, has played a major role in driving Bitcoin’s 40% increase this year. Due to the strength of the rise, Bitcoin is expected to have its largest monthly gain since December 2020, when it increased by 50% to about $9,600.
Speaking on the present status of Bitcoin, BuyUcoin CEO Shivam Thakral said, “Bitcoin has gained more than 10% in a day, briefly touching $64,000 for the first time since November 2021.” Following a record-breaking day of trading activity of $7.69 billion for Bitcoin ETFs, the price of cryptocurrencies is getting closer to its all-time high.”
BlackRock’s iShares Bitcoin Trust (IBIT), which broke its own trading volume records at an astounding $3.3 billion, is one notable performance in this ETF-driven boom. Ethereum has crossed the $3,400 barrier and is continuing to rise, although at a slower rate than Bitcoin. There are rumors circulating that before the planned halving later this year, Bitcoin may reach a new peak.
The CEO of Mudrex, Edul Patel, offers analysis of the current spike, saying, “Bitcoin gained 7% and crossed over $63,000 in the last day. The reason for this increase is because as individual investors take advantage of the cryptocurrency boom, the top 10 Bitcoin ETFs in the US set a new daily record by breaking the $7.7 billion trading volume.”
Concerns of an approaching supply crunch have been aroused, nevertheless, by the enormous inflow of money into Bitcoin ETFs. Industry observers alert consumers to the fact that miners’ output of new currencies isn’t keeping up with the demand. Analysts estimate that for the last six months, almost 80% of Bitcoin’s supply has been unchanged, which might tighten the supply and increase the pressure on prices to rise.
Nine new spot ETFs have been introduced, and as a consequence, more over 3,00,000 Bitcoin are held—seven times the quantity of fresh coins created since January 11. Anticipating the anticipated halving in late April, the daily output of new coins will decrease from 900 to 450. Supporters estimate that there is significant opportunity for price growth for Bitcoin if demand stays the same and the supply of new coins is cut in half.
As shown by the increase in US Treasury rates, which suggests a change in market expectations for looser monetary policy, Bitcoin has outperformed other conventional assets in 2024, such as equities and gold. Since the beginning of the year, the value of cryptocurrencies has more than tripled, demonstrating a spectacular return from a 64% decline in 2022 that raised concerns about the future of digital assets.
However, commentators are concerned about investors’ susceptibility to the boom-and-bust cycles that have come to characterize the cryptocurrency market due to the rally’s rapidity.
