Bitcoin experienced a momentary surge to a historic peak on Friday amidst volatile trading, sustaining the ongoing cryptocurrency frenzy in the investment community. The leading digital currency breached the $70,000 threshold for the first time, propelled by heightened investor demand for new US spot exchange-traded crypto products and anticipations of a global decline in interest rates.
Surging to a pinnacle of $70,105 before a rapid descent, Bitcoin was last observed trading at $68,317.72. The influx of billions of dollars into exchange-traded funds (ETFs) in recent weeks has fortified the market. Additionally, positive developments such as an imminent upgrade to the Ethereum blockchain platform and an upcoming Bitcoin “halving” event in April, which reduces the rate of Bitcoin mining, have contributed to the cryptocurrency’s buoyancy.
Despite these favorable factors, skeptics highlight the speculative nature of digital assets. After reaching a record high earlier in the week, Bitcoin experienced a sharp reversal, dropping more than 10% below the $60,000 threshold.
Antoni Trenchev, co-founder of the crypto lending platform Nexo, commented on the challenges associated with navigating historical highs in the Bitcoin market. He noted that volatility characterizes Bitcoin bull markets, predicting that 2024 could witness abrupt and significant plunges in the range of 10% to 20%.
The approval of 11 spot Bitcoin ETFs by the US Securities and Exchange Commission in late January marked a pivotal moment for the industry, signaling a recovery from an 18-month-long crypto winter marked by corporate bankruptcies and scandals. Institutional investors, traditionally cautious due to cryptocurrency’s volatility, have begun allocating long-term investments, potentially bolstering the ongoing market rally.
Recent data indicates significant net flows into the ten largest US spot Bitcoin funds, reaching $2.2 billion in the week ending March 1. Over $2 billion of this inflow was directed towards BlackRock’s iShares Bitcoin Trust. The positive sentiment surrounding Bitcoin has spilled over into other digital tokens, notably Ethereum, the second-largest cryptocurrency by total market value, which has surged over 60% since the beginning of the year.
Ether, the cryptocurrency associated with the Ethereum platform, rose by 1.62% to $3,939.84. Furthermore, stocks related to the cryptocurrency market, including Coinbase, Riot Platforms, and Marathon Digital, demonstrated notable gains, reinforcing the broader positive trend in the crypto sector. Coinbase shares rose by 8.2%, while crypto miners Riot Platforms and Marathon Digital experienced gains of 5.1% and 9.6%, respectively.
