March 4, 2024
On Monday, the bitcoin rate rose to a two-year high, exceeding $65,000 per bitcoin.
During Asian trading, the price of Bitcoin has already reached a new two-year high, and at the beginning of the European session the price reached $65,537. The historical maximum price of Bitcoin occurred in November 2021, when it was traded at $68,999.99.
Bitcoin’s market capitalization is $1.25 trillion. According to cryptocurrency platform CoinGecko, the value of all bitcoins in circulation in March exceeded $2 trillion for the first time in two years.
The largest cryptocurrency by market value has risen 50% since the start of the year, with most of the gains coming in the past few weeks as inflows into U.S.-listed cryptocurrency funds increased.
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Bitcoin’s competitor, Ethereum, has also attracted attention: investors believe that it might soon become a source of influx of funds into exchange-traded funds. It is up 50% year to date and was trading at two-year highs on Monday, reaching $3,518.
“In a world where the Nasdaq reaches new all-time highs, cryptocurrencies will perform well as Bitcoin remains a highly volatile technology proxy and liquidity indicator,” said Brent Donnelly, president of market research firm Spectra Markets. “We’re going back to a 2021-style market where everything is up and everyone is happy.”
Why is Bitcoin becoming more expensive?
Spot exchange-traded cryptocurrency funds were approved by the American financial regulator at the beginning of the year. Their launch opened the door to new large institutional investors and reignited their enthusiasm.
“Finance flows are not drying up because investors feel more confident the higher the price,” says Markus Thielen, head of research at cryptanalytic firm 10x Research in Singapore.
Net inflows into the 10 largest U.S. Bitcoin funds reached $2.17 billion in the last week of February, with more than half of that coming from BlackRock’s iShares Bitcoin Trust. The 10 largest spot Bitcoin ETFs raised $420 million on February 27 alone, according to LSEG.
image copyrightTOM WILLIAMS
Photo caption,
FTX founder Sam Bankman-Fried went to prison in 2023 on charges of financial fraud. The exchange went bankrupt a year earlier
The price of Bitcoin has skyrocketed more than 300% since falling to a recent low of $15,000 per Bitcoin following the collapse of cryptocurrency exchange FTX.
“Max says Qatar may have added Bitcoin to its balance sheet,” wrote Anthony Scaramucci, founder of Skybridge Capital, who also briefly served as communications director for former US President Donald Trump. “If this is true, then all we can say is thanks to Max Kaiser!”
Max Kaiser, an unorthodox Bitcoin investor who is working with El Salvador on its Bitcoin strategy (El Salvador became the first country in the world to adopt Bitcoin as an official currency in 2021, as well as investing public funds in the asset), previously argued that the sovereign Qatar’s fund is “rumored to want to buy $500 billion worth of Bitcoin.” True, he did not provide any evidence of this.
President of El Salvador Nayib Bukele, by the way, said that he does not plan to sell the country’s huge reserves of bitcoins, despite the fact that the sale would bring huge profits.
Meanwhile, an unknown Bitcoin buyer has accumulated $3.2 billion worth of Bitcoin over the past year, buying 100 Bitcoins at a time since April last year. Now he has almost 55 thousand bitcoins in his portfolio.
The rise in Bitcoin prices is also fueling the upcoming halving scheduled for April. Bitcoin halving occurs every four years and involves a reduction in the rate of issuance of tokens, as well as a halving of the reward for miners.
Along with mystery buyers and rumors regarding the adoption of Bitcoin as a national currency in different countries, the price of the cryptocurrency is fueled by all sorts of gossip on social networks that billionaire and Amazon founder Jeff Bezos is buying Bitcoin.
Thomas Farrer, co-founder of cryptocurrency company Apollo, in a post on social media X cited documents showing Bezos selling $8.5 billion worth of Amazon shares as evidence that the surge in Bitcoin prices may be driven by billionaires’ fear of missing out.
Ivan Tikhonov. Founder of the cryptocurrency website Bits.media
It’s more interesting for me to follow the cyclicality. People have empirically found the relationship between growth and decline, if you divide the exchange rate chart into sections from halving to halving, they called it cycles.
Halving is a planned reduction in the rate of production of new coins, embedded in the Bitcoin protocol. Approximately once every 4 years, the amount of remuneration to cryptocurrency miners (miners) for the mined block is reduced by 2 times. This reduces the supply of new issue coins to the market.
Usually, some time following the halving, the rate begins to rise strongly, peak, then fall, reach the bottom, and then recover slightly before the next halving. And with some deviations, it has been working stably for three cycles, that is, regarding 12 years.
But we must understand that past events do not at all guarantee that everything will be exactly the same in the future.
This is the first time that there has been such growth before halving, if we take full cycles since 2012. Although in the current cycle, the second peak was also drawn with covid money. Maybe here some event, such as an injection of money from an ETF, changes the usual structure of movement.
ETF (Exchange Traded Fund) is an exchange-traded investment fund whose units (shares) are traded on an exchange. Units are similar to investment portfolios – the fund management company issues them to the stock exchange, where they are traded like ordinary shares.
In January, the US Securities and Exchange Commission (SEC), following ten years of waiting, approved exchange trading in shares of 11 spot ETFs whose underlying asset is Bitcoin.
This will simplify access to digital currencies for a wide range of investors, including private ones.
