Bitcoin reached a historic peak on Tuesday, surging to $69,202, surpassing the previous all-time high of $68,999.99 set in November 2021. This remarkable ascent has been attributed to increased investor activity in U.S. spot exchange-traded crypto products and the anticipation of a global decline in interest rates.
The surge in interest gained momentum after the Securities and Exchange Commission greenlit 11 spot bitcoin ETFs in late January. However, the cryptocurrency recently experienced a 7% decline, settling at $63,400.
Nathan McCauley, CEO and co-founder of crypto platform Anchorage Digital, commented on the significance of this milestone, stating, “The bitcoin all-time high marks a turning point for crypto. Traditional institutions were once sitting out; today, they are here in full force as the principal drivers of the crypto bull market.”
Experts believe that Bitcoin’s recent rally might have more sustainability compared to 2021, as institutional investors show a growing commitment to long-term investments in the cryptocurrency. The almost 160% surge since October, with a notable 44% spike in February alone, contrasts sharply with the challenging market conditions of 2022, characterized by an 18-month crypto winter and corporate bankruptcies.
Data from LSEG indicates that net flows into the ten largest U.S. spot bitcoin funds reached $2.2 billion in the week ending March 1, with over $2 billion directed towards BlackRock’s iShares Bitcoin Trust.
Steve Sosnick, chief strategist at Interactive Brokers, remarked on the recent surge, stating, “Bitcoin has essentially been going straight up for several days. It’s normal to see a little bit of profit-taking when any asset becomes so extended.”
Bitcoin’s appeal has been further fueled by the potential for a U.S. interest rate cut, prompting investors to seek higher-yielding or more volatile assets. Alvin Tan, head of Asia FX strategy at RBC Capital Markets, highlighted the positive sentiment on risk, evident in the all-time highs of the S&P 500 and Nasdaq.
The prospect of the Federal Reserve reducing interest rates has also contributed to the rally, as investors turn to crypto, mega-cap tech stocks, and investment-grade corporate bonds. Gold, too, achieved a record high on Tuesday, surpassing $2,100 per ounce.
The upcoming halving event in April, which occurs every four years and reduces the rate of token release and miner rewards, has added to Bitcoin’s appeal. With the supply of bitcoin limited to 21 million, and approximately 19 million already mined, scarcity becomes a significant factor.
Despite Bitcoin’s popularity, some investors still view it as too volatile and lacking real-world applications beyond speculation. However, as companies like MicroStrategy and Reddit add crypto to their corporate portfolios, and Tether’s stablecoins surpass $100 billion, the cryptocurrency market continues to evolve.
The article concludes by noting that while Bitcoin thrives, other cryptocurrencies like Ethereum trade below their previous record highs. Crypto stocks, including Coinbase, Riot Platforms, and Marathon Digital, experienced declines on Tuesday.
