Bitcoin soared to a fresh peak, exceeding $63,000 on Wednesday, marking its highest level since November 2021. This surge was propelled by heightened trading activity in Bitcoin exchange-traded funds.
Furthermore, investor enthusiasm for Bitcoin was invigorated by a reduction in its supply growth, commonly referred to as “halving,” slated for April.
Bitcoin, the leading cryptocurrency, has undergone a remarkable resurgence since trading at approximately $20,000 less than a year ago. Its value has surged by roughly 45% since the start of the year, catapulting from $42,000 to over $60,000 in a matter of weeks.
Bitcoin ETFs and Halving: Influential Forces On Price Dynamics
As trading activity surrounding spot Bitcoin ETFs hit its peak levels since these funds became accessible to retail investors in January, the price of the digital asset experienced a surge.
According to Bloomberg Senior ETF Analyst Eric Balchunas, nine new spot Bitcoin ETFs, excluding the established Grayscale Bitcoin Trust (GBTC), witnessed a record-breaking trading volume on Monday.
Eric Balchunas stated in a post on X (formerly Twitter),
“It’s official…the New Nine Bitcoin ETFs have broken all-time volume records today with $2.4 billion, just barely surpassing Day One but approximately double their recent daily average. $IBIT went wild, accounting for $1.3 billion of it, breaking its record by about 30%.”
Blackrock’s iShares Bitcoin Trust (IBIT), a component of Blackrock (BLK), witnessed its trading volume records shattered on both Monday and Tuesday.
In addition to the excitement surrounding spot Bitcoin ETFs, a recent report from Grayscale Advisors LLC emphasized the upcoming Bitcoin halving event as a significant factor influencing Bitcoin prices. Set for April, the halving will reduce the supply of new Bitcoin created per block and halve rewards for Bitcoin miners.
With Bitcoin’s total supply capped at 21 million and nearly 19.6 million already in circulation, the halving will further diminish the supply, heightening the token’s scarcity.
Furthermore, the halving event is anticipated to affect the returns of Bitcoin mining stocks, which have recently seen remarkable gains, as outlined.
Bitcoin’s Surge: Ripple Effects on Cryptocurrency Market Dynamics
Bitcoin’s surge has positively impacted the entire cryptocurrency market. According to CoinGecko data, the total market capitalization of all cryptocurrencies has surpassed $2 trillion for the first time since April 2022, with Bitcoin alone contributing nearly $1.2 trillion to this total.
While the gains in the crypto market haven’t matched the rapid pace of Bitcoin’s ascent this year, ether (ETH) recently surpassed the $3,000 mark for the first time since April 2022.
Stocks focused on cryptocurrencies, including Coinbase (COIN) and Riot Blockchain (RIOT), have also achieved new yearly highs during this latest rally.
Notably, software intelligence company Microstrategy (MSTR) now holds over $11 billion worth of Bitcoin on its balance sheet, as reported.