Bitcoin madness is igniting...a wild session brings the cryptocurrency closer to its historic peak

2024-02-29 04:59:00

Bitcoin expression – (Agence France Presse)

Bitcoin

Demand from ETFs is 7 times higher than the cryptocurrencies mined since the beginning of the year

Dubai – Al Arabiya.net

Published on: February 29, 2024: 08:59 AM GST Last updated: February 29, 2024: 09:10 AM GST

Bitcoin had a wild session on Wednesday, with all the bullish drivers coming together, with increased demand for the cryptocurrency generated by new exchange-traded funds (ETFs) vastly outpacing the amount of Bitcoin that long-time holders are willing to sell. The market was further fueled by traders chasing upward momentum, covering short positions and increasing leveraged bets that the uptrend would continue.

Bitcoin jumped as much as 13% to $63,968 — its first trip above $60,000 since November 2021 — before paring its gains, as high traffic led to trading disruptions and $0 in user balances on display at Coinbase, the largest digital asset exchange in the world. United State.

Bitcoin has jumped about 40% already this year, mostly due to the successful launch of US exchange-traded funds that have attracted more than $6 billion since they began trading on January 11. Bitcoin last traded above $60,000 in November 2021.

For his part, Ryan Kim, head of the financial derivatives department at the main financial brokerage firm for digital assets, FalconX, said: “The rises have become absolutely crazy.”

Bitcoin trading volume has risen to more than $79 billion, or nearly 60%, in the past 24 hours, according to data from CoinMarketCap. As Bitcoin’s value rose higher and higher, Coinbase Global began to see what CEO Brian Armstrong referred to on social media platform X as a “significant increase in traffic.”

The exchange reported that some users were encountering errors when trying to buy or sell and that some showed zero balance on the platform. “Your assets are safe,” Coinbase said on its website, later adding that activity was starting to return to normal.

The intense rally pushed Bitcoin to its biggest monthly gain since December 2020, when the digital token jumped 50% to around $9,600.

The value of the cryptocurrency has more than tripled since the beginning of last year, rebounding from a 64% decline in 2022, in a notable comeback from a series of cryptocurrency industry scandals and bankruptcies that have raised questions about the viability of digital assets.

Cryptocurrencies are jumping even though investors have reduced their expectations for a more flexible monetary policy this year, as evidenced by a rise in US Treasury yields. Bitcoin will outperform traditional assets such as stocks and gold in 2024.

Michael Savai, co-founder of quantitative trading firm Dexterity Capital, said: “This reversal is very impressive in light of central banks signaling that they intend to keep interest rates high for longer, eroding the theory that the next cryptocurrency price rally will be driven by a reduction in interest rates. interest rates”.

Massive inflows into Bitcoin ETFs have led some industry observers to warn of a looming supply squeeze as new cryptocurrencies from miners cannot keep up with demand. About 80% of Bitcoin supply has not been traded in the past six months, which could exacerbate the squeeze and increase upward pressure on prices, analysts said.

The nine new spot ETFs hold more than 300,000 BTC, or 7 times the amount of new coins mined since January 11. After the expected halving in late April, the number of new coins mined daily will decrease to 450 from the current 900. If this demand remains steady, with the supply of new coins cut in half, proponents expect the price to have room to rise.

“All of this combined creates an imbalance between supply and demand,” said crypto hedge fund founder Dan Slavin. “More demand than supply means a higher price, and with Bitcoin prices so volatile, a higher price doesn’t mean 10%, it means a lot more.”