The surge propelling Bitcoin to a record high is based on supply and demand. New US exchange-traded funds are buying more tokens than long-time holders are selling Bitcoin. That sparked the crypto market and attracted momentum-hungry traders, forcing negative bets to shut while leveraged betting for greater gains grow.
Bitcoin jumped 13% on Wednesday to $63,968 — its first excursion above $60,000 since November 2021 — before settling at $62,535 at 6 a.m. London on Thursday. Coinbase, a large US digital-asset exchange, experienced interruptions as demand increased before resuming services.
Following the successful introduction of US ETFs that directly own Bitcoin, the token has risen over 40% this year. On Jan. 11, BlackRock Inc. and Fidelity Investments launched funds that had attracted $7 billion in net inflows. The coin is approaching its pandemic-era high of $68,991.85, a bullish outlier amid global market uncertainty because to lowered prospects for softer monetary policy.
Even while disagreement persists over how much the Bitcoin supply halving will affect prices, the mood is optimistic. “Optimism around Bitcoin is being driven by a few factors working together: spot BTC ETF inflows in the US, the upcoming halving of new Bitcoin issuance, and overall renewed optimism around the crypto asset class as a whole,” said Kraken Australia managing director Jonathon Miller.
Bitcoin has more than quadrupled since January, recovering from a 64% drop in 2022. That's a stunning recovery from scandals and bankruptcy that questioned crypto's sustainability. In 2024, Bitcoin beat equities and gold, creating volatility for traders.
Industry analysts warn of a supply bottleneck due to Bitcoin ETF inflows. About 80% of Bitcoin's supply hasn't changed hands in six months. The nine new spot ETFs have almost 300,000 Bitcoin, seven times the amount produced since Jan. 11.
The halving in late April will reduce daily currency production to 450 from 900. Advocates expect the price to rise if demand remains steady. “We are starting to see a pretty clear FOMO kind of rally,” said Split Capital founder Zaheer Ebtikar. “More people are convinced to buy.”
The rapidity of the ascent has some analysts worried about crypto's boom-bust cycles. Bitcoin fell below $15,500 a year after its November 2021 record high.
According to crypto hedge firm AnB Investments founder Jaime Baeza, “This move has been very sharp, leverage is very high at the moment, as implied by derivatives basis and funding rates, so I would not be surprised by a sharp correction” of 20% or more. “Nonetheless, I would not short this rally while it continues at this pace.”
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