Bitcoin price rise continued on Wednesday, shooting above $63,000 for the first time since November 2021. Bitcoin price rose to the coveted $60,000 mark for the first time in more than two years. The largest cryptocurrency exchanges Bitcoin price rise was seen amid a surging optimism that demand for the token is widening beyond committed digital-asset enthusiasts.
The largest cryptocurrency has already jumped more than 40% this year, fueled in part by the successful launch of U.S. exchange-traded funds (ETFs) holding the coins that have attracted more than $6 billion since they began trading on January 11.
At 1325 GMT, bitcoin traded at about $60,301, closing in on its all-time high of $68,991, which was last seen in November 2021.
Bitcoin price rise
The price of the flagship cryptocurrency was last higher by nearly 6% at $60,356.75. Earlier, it briefly touched $64,000 before turning lower. It’s just below its all-time high of $68,982.20.
Both bulls and bears have been getting whipsawed by the sharp price movements. Over the past 24 hours, $176 million in short liquidations and $86.1 million in long liquidations occurred across centralized exchanges, according to CoinGlass.
Resurgence of Bitcoin
One of the reason for the surge in Bitcoin price is when traders use leverage to short bitcoin, the cryptocurrency’s price rises. Then they buy bitcoin back from the market to close their positions, which pushes the price up and causes more positions to be liquidated.
With the record in clear sight, the market has been even more motivated to see that level retested. Bitcoin has soared nearly 20% this week alone, after a week-long pause of this year’s rally. It’s now up more than 40% for 2024. Bitcoin has outperformed traditional assets like stocks and gold in 2024.
“Bitcoin is approaching new yearly highs off the back of increased spot demand and momentum traders taking positions after a week of consolidation,” as per Chris Newhouse, a DeFi analyst at Cumberland Labs.
Launch of EFT helped the surge
The launch of ETFs have risen the exceptions of investors that bitcoin will set a new record this year made the asset class more accessible to institutional investors. This along with the network’s upcoming halving event, which historically has set the stage for a major rally in the months that follow.
“Bitcoin demand is colliding with increasingly tight supply,” said Zach Pandl, head of research at Grayscale Investments. “The new U.S. spot bitcoin ETFs have pulled in an average of $195 million per calendar day in February, whereas the Bitcoin network currently produces [about] 900 coins per day — or about $54 million worth of bitcoin, assuming a price of $60,000.”
“Given the approaching Bitcoin halving in April, issuance will fall by half … There is simply not enough bitcoin to accommodate all the new demand, and so natural supply/demand dynamics are driving prices higher.”
Halving
The expected approval of the new investment product had contributed in recent months to a rise in its price, which had largely fallen by the end of 2022 following the bankruptcy of several crypto giants.
An upcoming reduction in Bitcoin’s supply growth, known as the halving, is adding to the optimistic sentiment. That has helped to extend a prolonged rally that has also stoked speculative appetite for smaller tokens ranging from Ether to Dogecoin.
After the halving, expected in late April, the number of new coins mined daily will decline to 450 from 900 currently.
Interest rate cut
Bitcoin price rise has also been partly boosted by hopes that the U.S. Federal Reserve will start to cut interest rates this year as inflation eases.
The nine new spot ETFs have more than 300,000 Bitcoin, or seven times the amount of new coins mined since January 11.
Bitcoin-related equities
Bitcoin’s big surge initially gave a lift to bitcoin-related equities, which gave back some gains after the cryptocurrency pulled back. Bitcoin proxy Microstrategy jumped 10.5% and the miner Marathon Digital rose 2.4%. Block, which operates a bitcoin trading service and holds the cryptocurrency on its balance sheet, gained nearly 1%.
Crypto exchange Coinbase gave back some of its earlier gains after its users reported zero balance errors in their accounts and issues buying and selling. It closed higher by 0.8%
The value of all the bitcoin in circulation has topped $2 trillion this month for the first time in two years, according to crypto platform CoinGecko.
