Bitcoin (BTC) reached a historic milestone, surpassing $71,000 for the first time ever during Asian trading hours on Monday. The leading cryptocurrency has been on a steady upward trajectory following the approval of spot bitcoin exchange-traded funds (ETFs) in the United States. Last week, BTC crossed the $70,000 mark for the first time, reflecting the growing investor confidence in the digital asset. Additionally, Ether (ETH) also experienced significant gains, crossing the $4,000 mark on Monday. The broader CoinDesk 20 index (CD20) recorded a nearly 1% jump, indicating positive sentiment across the cryptocurrency market.
The ongoing rally has led to an increase in the annualized three-month futures premium on major exchanges, including Binance, which has exceeded 25%. This elevated premium has the potential to attract cash and carry traders, thereby enhancing overall market liquidity.
Bitcoin’s surge to new all-time highs coincided with a decline in Asian equity indices, with Japan’s Nikkei and Australia’s ASX experiencing a 2% drop following a Reuters report suggesting that the Bank of Japan (BOJ) may raise the benchmark interest rate above zero this month. Analysts have cautioned that the BOJ’s actions could introduce uncertainty into both traditional and crypto markets.
Despite these concerns, there is a consensus among market participants that any potential dip in bitcoin’s price is likely to be short-lived. This sentiment is driven by the supply-demand dynamics created by strong inflows into U.S.-listed spot ETFs and the impending reward halving event. Moreover, the Financial Conduct Authority in the United Kingdom has opened the door for institutional investors to create crypto asset-backed exchange-traded notes (ETNs). The London Stock Exchange has confirmed that it will accept applications for bitcoin and ether ETNs in the second quarter of this year, further fueling optimism in the cryptocurrency market.