Bitcoin experienced its fifth consecutive day of growth, approaching the $60,000 mark on Wednesday. This upward momentum was fueled by inflows to new US spot bitcoin exchange-traded products, propelling it by 39.7% over February. If sustained, this would mark Bitcoin’s biggest monthly rally since December 2020.
Since the last update, Bitcoin showed a 4.4% increase, reaching $59,259, its highest level since December 2021. At the same time, Ether, another major cryptocurrency, witnessed a 2.2% increase to $3,320, hitting yet another two-year peak.
Investors and traders have been increasingly attracted to Bitcoin, especially ahead of April’s halving event. This event is a crucial aspect of Bitcoin’s design, intended to slow the release of new bitcoins into circulation.
On February 26, Bitcoin surged to its highest level in more than two years, hitting $57,000. The cryptocurrency saw a 9 percent increase, briefly touching the significant $57,000 for the first time since November 2021, according to CoinDesk. However, it later retreated to around $56,500 levels.
Bitcoin surged more than 200 percent from its November 2022 lows, following the FTX incident, according to Zakhil Suresh, CEO of crypto investment platform BitSave.
“This rally was mainly triggered by institutional allocation and the increased retail participation in recent months due to Bitcoin Spot ETF applications in the US and upcoming Bitcoin halving,” Suresh said.
He further noted, “Digital asset investment products saw weekly inflows totaling $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.”
Why are Bitcoin prices rising?
“Bitcoin is nearing new yearly highs on the back of increased spot demand and momentum traders taking positions after a week of consolidation,” Chris Newhouse, DeFi analyst at Cumberland Labs, told Bloomberg.
Even with the upward movement, liquidations remain relatively moderate in the current price dynamics, as raised long positions quickly fill the void left by closed short positions.
Newhouse highlighted a noticeable increase in the open interest, representing outstanding contracts, for perpetual Bitcoin futures. At the same time, short positions were pressured to close out amid the recent rally, perhaps as a result of new long positions entering the market.
(With inputs from Reuters and Bloomberg)
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Published: 28 Feb 2024, 14:49 IST