The price of bitcoin jumped beyond $57,000 on Tuesday on the back of a record day of trading volumes for recently-launched spot Exchange Traded Funds.
Bitcoin is now trading at its highest price in dollar terms since November 2021 and is helping spark a rally in other major cryptocurrencies like ethereum, which tipped above the $3,000 mark on Tuesday – its highest price since April 2022.
It follows a record day for bitcoin spot ETF trading volumes, which were valued at $2.4billion on Monday with Blackrock’s iBIT leading the way at $1.3billion, according to fund manager data.
The $57,000 figure meant that trading was at its highest level since December 2021
Bitcoin spot ETFs accumulated around 9,000 bitcoin yesterday, which was 10 times the daily new supply of bitcoin brought into circulation.
Simon Peters, market analysist at eToro, told This is Money: ‘The driving force behind the price move seems to be from the recently approved bitcoin spot ETFs continuing to acquire bitcoin in significant quantities.
‘Since launch, the bitcoin spot ETFs have amassed holdings that represent over 3 per cent of all bitcoin currently in existence. This milestone highlights a growing trend of institutional investors wanting to get exposure to bitcoin.
‘I expect this trend to continue and it is possible that we could see bitcoin make a new all-time high (with the price going above $69,000) in the coming weeks.’
Matteo Greco, research analyst at Fineqia International, said: ‘Personally, I believed and still believe new highs in 2024 are possible.
‘The market trend appears decidedly bullish. Bitcoin is currently trading approximately 25 per cent below its all-time high, not far from that level.
‘Moreover, in the first couple of months of 2024, we have already witnessed several traditional finance assets and indexes reaching new highs, indicating strong momentum for risk-on assets overall and making the possibility of new highs in 2024 something to consider.’
The world’s biggest cryptocurrency has regained significant ground since falling to to a low of $16,000 in the wake of the collapse of FTX in 2022.
Bitcoin has risen by 32 per cent since the start of this year, having gained 16.7 per cent over a seven day period in February.
In 2023, it languished between $20,000 and $30,000 for much of the year before reaching $43,000 by December in anticipation of the US regulator’s approval of bitcoin spot ETFs.
It neared the $48,000 mark for the first time in a year ahead of the decision before dropping to $38,000 following the decision.
Peters added: ‘We also have the block reward halving happening in April this year, which will decrease bitcoin’s inflation rate from around 1.75 per cent to around 0.87 per cent, so where we have seen approximately 1,314,000 bitcoin come into circulation in the last four years, approximately 657,000 bitcoin will come into circulation in the next four years from April.
‘The halving has historically marked the start of the next bitcoin bull market and typically in the year that has followed the price action has gone parabolic.
‘From the last block reward halving in May 2020, the bitcoin price appreciated 600 per cent to the current $69,000 all-time high.
‘Whilst I don’t anticipate we’ll see as significant a percentage gain this time round (as typically the percentage gain from halving to all-time high has decreased each cycle), it is very possible that we could see the peak of the bull market somewhere in the six figures.’
