Mar 5 2024: During Asian trading hours on Tuesday, Bitcoin prices surpassed significant thresholds, coming within less than $1,000 of a record high reached during the peak of the 2021 bull market.
The largest cryptocurrency globally surged by as much as 8.5%, reaching an over two-year peak of $68,450.9. By 20:05 ET (01:05 GMT), it was comfortably trading above the $68,000 mark, positioning itself tantalizingly close to the record of $68,999 set in late 2021.
Bitcoin’s upward momentum was primarily fueled by consistent capital inflows into the digital asset, particularly following the approval of several U.S. exchange-traded funds that directly mirror its price.
The token’s recent gains were also influenced by its correlation with technology stocks, with market participants anticipating an impending halving in the rate of new Bitcoin production, which is anticipated to tighten market conditions.
Data from CoinShares, a digital asset manager, revealed that investment products linked to Bitcoin witnessed a fifth consecutive week of capital inflows, totaling $1.7 billion in the week ending March 4. While short positions on Bitcoin increased, U.S.-listed ETFs tracking the cryptocurrency, notably offerings from BlackRock and Fidelity, attracted the majority of inflows.
Conversely, Grayscale experienced sustained outflows as it faced heightened competition in the Bitcoin ETF landscape.
Sentiment towards Bitcoin received a boost from Microstrategy, the largest corporate holder of the cryptocurrency, announcing its plan to issue $600 million in debt to acquire more Bitcoin.
Meanwhile, Ethereum, the second-largest cryptocurrency globally, climbed 4% to reach a two-year high of $3,624.03, with attention also focused on the potential approval of a spot ETF for the token. Crypto-related stocks on Wall Street also rallied in response.
Despite the impressive rally of Bitcoin, Ethereum, and associated assets, trading volumes, particularly for Bitcoin and Ethereum, remained well below the peaks observed after the 2022 bull run, according to data from Investing.com.
While Bitcoin has surged by more than 400% from its late-2022 lows, retail interest in cryptocurrencies has remained subdued following several high-profile frauds and bankruptcies in recent years. Allegations of price manipulation, particularly by issuers of stablecoins, have surfaced in the wake of Bitcoin’s latest surge, while relatively low trading volumes are also linked to its significant price escalation.
