June 18, 2024

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Bitcoin breaks $61,000 as flood of ETF demand pushes currency towards all-time high

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The crypto markets are in the midst of a full-blown rally as Bitcoin, after crossing the psychologically important $50,000 mark on February 12th, shot upwards again this week with the currency trading around $61,400 as of late morning ET on Wednesday.

The new breakout puts Bitcoin’s price at its highest level since November of 2021, the peak of the last crypto boom, when the currency hit its all time high of around $69,000.

Bitcoin is famous for its volatility and there is rarely a single factor to explain its periodic surges and crashes but, in the case of the current rally, a new influx of institutional money has driven demand following the approval of a spate of Bitcoin ETFs by the Securities and Exchange Commission in early January.

Those approvals brought major names from traditional finance, notably BlackRock and Fidelity, into the Bitcoin space. On Tuesday alone, Blackrock’s industry-leading iShares bitcoin ETF (IBIT) pulled in $520 million of new inflows, partly due to the company’s many affiliates offering the cryptocurrency to their customers for the first time.

“Bitcoin demand is colliding with increasingly tight supply. The new US spot Bitcoin ETFs have pulled in an average of $195 million per calendar day in February,” said Zach Pandl, Head of Research at Grayscale, which is another major player in the new industry. “There is simply not enough Bitcoin to accommodate all the new demand, and so natural supply/demand dynamics are driving prices higher.”

Pandl also pointed to the impending “halving”—a once every four year event where the daily new supply of minted Bitcoin is cut by 50%—as a reason for the surge in demand. The next halving, which will see the volume of new coins drop from around 900 per day to 450, is expected to come around April 19 of this year.

The current rally has seen Bitcoin climb around 40% since the start of the year, and created a vibe in the crypto industry that is a far cry from late…

Jeff John Roberts

2024-02-28 11:37:47

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