Bitcoin has passed the $60,000 mark, inching closer to its all-time high as it maintains its upward trajectory after the green light was given for a new investment option linked to the cryptocurrency.
MIAMI, FLORIDA - APRIL 8: A bitcoin logo is seen during the Bitcoin 2022 Conference at Miami Beach Convention Center on April 8, 2022 in Miami, Florida.
Bitcoin Nears its All-Time High
According to AFP, as of 1325 GMT on Wednesday, bitcoin was trading around $60,301, edging towards its all-time high of $68,991 recorded in November 2021, a level that some analysts believe could soon be revisited.
The recent surge in the cryptocurrency's value can be attributed partly to US securities regulators' approval of exchange-traded funds (ETFs) tied to the bitcoin on January 10.
These ETFs have opened avenues for a broader segment of the public to invest in bitcoin indirectly without needing to hold the digital currency directly. Although these funds invest in bitcoin, their approval has generated renewed optimism and interest in the cryptocurrency market.
This development has revitalized trading volumes and brought increased attention to companies with ties to the crypto sector, according to Mikkel Morch of ARK36.
The introduction of ETFs and exchange-traded products (ETPs) in the United States has made investing in bitcoin more accessible to everyday investors, drawing comparisons to traditional stocks and mutual funds.
Following the approval of these investment products, there was an initial wave of withdrawals from the GBTC (Grayscale Bitcoin Trust) fund as investors sought to capitalize on their positions.
However, once the initial selling pressure decreased, there was a resurgence in inflows into US bitcoin ETFs, including those offered by asset management giant BlackRock.
Data from asset manager CoinShares indicates that exchange-listed investment products linked to crypto assets have attracted approximately $5.7 billion in inflows since the beginning of the year.
Additionally, according to AFP, the recent purchase of 3,000 bitcoins worth $155 million by software company MicroStrategy underscores the growing institutional interest in bitcoin.
This acquisition brings MicroStrategy's total bitcoin holdings to 193,000 bitcoins, valued at approximately $6.09 billion.
The 'Halving' Event
Bitcoin's price surge is supported further by anticipation surrounding the upcoming "halving" event in April. This event, which happens approximately every four years, involves halving the reward for bitcoin miners, which is expected to reduce the token's supply and potentially drive up its value.
According to James Harte, an analyst from Tickmill, the impending halving event contributes to the bullish sentiment surrounding bitcoin, as it underscores the cryptocurrency's scarcity and the potential for increased demand.
Despite the speculative nature of cryptocurrencies, Nigel Green, head of financial advisory firm deVere Group, remains optimistic about bitcoin's prospects.
He anticipates continued momentum in the cryptocurrency market, driven by growing interest in spot ETFs and the upcoming halving event, which could propel bitcoin's price beyond the $69,000 mark.
Moreover, bitcoin's momentum has been bolstered by anticipations that the Federal Reserve might initiate interest rate reductions later in the year due to alleviating inflationary pressures.
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