Bitcoin reached a new high, surpassing $63,000 on Wednesday, the first time since November 2021. This surge was fueled by increased trading in Bitcoin exchange-traded funds.
Investor interest in Bitcoin was also boosted by a decrease in its supply growth, known as “halving,” which is scheduled for April.
Bitcoin, the largest cryptocurrency, has made a remarkable recovery since trading at about $20,000 less than a year ago. Its prices have risen by about 45% since the beginning of the year, jumping from $42,000 to over $60,000 in just a few weeks, according to Investopedia.
Bitcoin ETFs and halving influenced the prices
As the trading activity around spot Bitcoin ETFs reached its highest levels since these funds became available to retail investors in January, the price of the digital asset surged.
Nine new spot Bitcoin ETFs, excluding the existing Grayscale Bitcoin Trust (GBTC), reached a record-high trading volume on Monday, as reported by Bloomberg Senior ETF Analyst Eric Balchunas.
Eric Balchunas said in a post on X (formerly Twitter), “It’s official..the New Nine Bitcoin ETFs have broken all time volume record today with $2.4b, just barely beating Day One but about double their recent daily average. $IBIT went wild accounting for $1.3b of it, breaking its record by about 30%.”
It’s official..the New Nine Bitcoin ETFs have broken all time volume record today with $2.4b, just barely beating Day One but about double their recent daily average. $IBIT went wild accounting for $1.3b of it, breaking its record by about 30%. pic.twitter.com/MiCs1rzttM
— Eric Balchunas (@EricBalchunas) February 26, 2024
Blackrock’s iShares Bitcoin Trust (IBIT), a part of Blackrock (BLK), saw its trading volume records broken on both Monday and Tuesday.
In addition to the excitement surrounding spot Bitcoin ETFs, a recent report from Grayscale Advisors LLC highlighted the upcoming Bitcoin halving event as a significant factor influencing Bitcoin prices. Scheduled for April, the halving will reduce the supply of new Bitcoin created per block and cut rewards for Bitcoin miners by half.
With the total supply of Bitcoin capped at 21 million and nearly 19.6 million already in circulation, the halving will further decrease the supply, increasing the token’s scarcity.
The halving event is also expected to impact the returns of Bitcoin mining stocks, which have recently experienced impressive gains, as reported by Investopedia.
Impact of rising Bitcoin on other cryptocurrencies
Bitcoin’s surge has had a positive impact on the entire cryptocurrency market. Based on the CoinGecko data, the total market capitalization of all cryptocurrencies has exceeded $2 trillion for the first time since April 2022. Bitcoin alone contributes nearly $1.2 trillion to this total.
Although the gains in the crypto market haven’t matched the rapid pace of Bitcoin’s rise this year, ether (ETH) recently crossed the $3,000 mark for the first time since April 2022.
Stocks focused on cryptocurrencies, such as Coinbase (COIN) and Riot Blockchain (RIOT), have also reached new highs for the year during this latest rally.
Notably, software intelligence company Microstrategy (MSTR) now holds over $11 billion worth of Bitcoin on its balance sheet, as reported by Investopedia.