Feb 20 2024: The world’s largest cryptocurrency has surged 22% this year to reach $52,005, crossing the $1 trillion market value milestone for the first time since its peak in late 2021.
Its resurgence has ignited excitement across the broader cryptocurrency market, with ether and other digital coins collectively surpassing $2 trillion, according to data from CoinGecko.
This surge has been fueled by the U.S. regulatory approval of several spot bitcoin exchange-traded funds (ETFs) by institutions like BlackRock and Fidelity, enabling access to cryptocurrencies via traditional stock exchanges.
The U.S. spot ETFs accumulated 60,000 bitcoin in their first month, surpassing miner production by more than double, as reported by brokerage Bernstein.
“The amount of flows far outstrips anyone’s expectation,” remarked Mark Connors, head of research at Canada’s 3iQ Corp.
Crypto trading volumes have also seen robust growth.
Total spot trading volumes on centralized exchanges increased by 4.4% to $1.4 trillion in January, marking the fourth consecutive monthly rise and reaching the highest level since June 2022, according to a report by London-based researcher CCData.
This renewed interest has propelled the largest listed crypto exchange, Coinbase Global, to post its first quarterly profit in two years last week.
“The bitcoin appreciation is contributing to better spot bitcoin ETF flows, which is in turn driving bitcoin prices higher, and pulling other tokens higher as well,” noted analysts at J.P.Morgan.
$150,000 Bitcoin Projection by 2025?
Industry experts are optimistic about the future, with investors accumulating bitcoin ahead of the blockchain’s upcoming “halving” event scheduled for April – a process that halves mining rewards every four years.
Gautam Chhugani, an analyst at Bernstein, anticipates a breakout year for cryptocurrencies in 2024, with bitcoin reaching all-time highs and peaking at $150,000 by mid-2025.
“This optimistic outlook is bolstered by the expectation of an upcoming halving event and the possibility of interest-rate reductions,” CCData analysts added.
While bitcoin remains 32% below its record high of $69,000, it achieved an all-time high against the Japanese yen at 7,919,000 yen last week.
Beware of Greed-driven Correction
However, there are indications that the market may be driven by FOMO (Fear of Missing Out).
CoinGlass’ Crypto Fear & Greed Index, which ranges from 0 to 100, hovered at 72, signaling “extreme greed.” Historically, such high levels of greed indicate a market due for correction.
Riskier assets like bitcoin could face threats from persistently high interest rates, as traders have pushed back rate cut expectations to June from March following strong U.S. economic data.
“While we remain bullish with liquidity rushing back into risk assets, inflation being sticky over 3% remains a downside risk and would also mean increased volatility across markets,” analysts at crypto trading firm QCP Markets cautioned.
