Bitcoin surged to a historic peak on Friday amid volatile trading, as the frenzy surrounding cryptocurrencies continued to captivate investors.
Reaching an unprecedented milestone, the leading cryptocurrency surpassed the $70,000 threshold for the first time. This surge was fueled by a surge in demand for new US spot exchange-traded crypto products, coupled with anticipation of a global decline in interest rates.
In a whirlwind of activity, Bitcoin soared to as high as $70,105 before experiencing a rapid downturn. However, it remained elevated, last trading at $68,317.72.
The cryptocurrency market has witnessed a substantial influx of capital into exchange-traded funds (ETFs) in recent weeks. This surge is further supported by optimistic expectations, including an upgrade to the Ethereum blockchain platform—home to Bitcoin’s rival, Ether—and an upcoming Bitcoin “halving” event scheduled for April. This event is significant as it reduces the rate at which new Bitcoins are generated, thereby potentially influencing supply and demand dynamics in the market.
Bitcoin’s recent ascent to record highs has been accompanied by sharp fluctuations, underscoring the speculative nature of these assets. Following its peak on Tuesday, Bitcoin experienced a rapid reversal, plummeting over 10% and dipping back below the $60,000 mark.
According to Antoni Trenchev, co-founder of crypto lending platform Nexo, navigating such price levels is notoriously challenging, with Bitcoin bull markets often characterized by volatility. Trenchev predicts that 2024 will witness numerous sudden and sizable price drops, ranging from 10% to 20%.
The approval of 11 spot Bitcoin ETFs by the Securities and Exchange Commission in late January marked a significant milestone for the cryptocurrency industry. This decision came after an 18-month period dubbed the “crypto winter,” marked by corporate bankruptcies and scandals.
Even institutional investors, previously cautious due to the market’s volatility, are now entering the space with long-term commitments. Analysts suggest that this institutional participation could sustain the current rally.
In the week ending March 1, net inflows into the 10 largest US spot Bitcoin funds totaled $2.2 billion. Notably, BlackRock’s iShares Bitcoin Trust received over $2 billion of these inflows, according to LSEG data.
The optimism surrounding Bitcoin has also spilled over into other digital tokens, particularly Ether, which has surged over 60% since the beginning of the year. Ether, the second-largest cryptocurrency by market value, was last trading at $3,939.84, up 1.62%.
Crypto-related stocks have also seen gains, with Coinbase shares rising 8.2%, and crypto miners Riot Platforms and Marathon Digital climbing 5.1% and 9.6%, respectively, on Friday.