(Bloomberg) — There appears to be little in the way of Bitcoin’s current rally. The largest cryptocurrency rose for a second straight day, nearing record highs on hopes of strong demand for exchange-traded funds (ETFs) earlier in the week.
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The most liquid token rose to $64,279, the first time it exceeded $64,000 since November 2021, but fell to $64,090 as of 7:42 a.m. in London.
At the heart of this frenzy for the largest crypto token appears to be insatiable demand from the US-listed Bitcoin ETF, which began trading on January 11th. Bitcoin has surged about 186% in the past 12 months.
Net inflows of $7.35 billion have been invested in the US Bitcoin ETF since its debut, with big fund names such as BlackRock Inc. and Fidelity Investments. Even a huge outflow from one prominent company (nearly $9 billion for the Grayscale Bitcoin Trust since the ETF went public) didn’t faze traders.
Hayden Hughes, co-founder of social trading platform Alpha Impact, said: “Given the weekend’s low liquidity, the market remains buoyant on expectations that ETF inflows will continue tonight and prices will continue to rise. “We are moving forward,” he said.
Traders are betting that the ETF’s price will rise above the coronavirus pandemic in November 2021, given strong demand for the ETF and concerns that it will miss out ahead of Bitcoin’s halving, expected in April of this year. He is betting that he will soon surpass the previous record of about $69,000. After the halving, i.e. when mining rewards are halved, the growth in the supply of coins will likely slow down, further putting pressure on demand.
Other tokens known as altcoins, such as Cardano and Solana, also rose 8% and 1%, respectively, on Monday.
meme rise
Small-cap tokens known as memecoins also rose in response to Bitcoin’s rise. Dogecoin is up nearly 20% and Shiba Inu is up 34% in the past 24 hours.
“This is a situation reminiscent of the 2021 bull market, where individual traders are struggling to escape from rising prices in highly volatile tokens,” said Caroline Moron, co-founder of Orbit Markets, a digital asset derivatives liquidity provider. They are trying to make a profit as soon as possible.”
Trading in crypto derivatives, which reflect traders’ positions, also showed a bullish outlook. Open interest in Chicago-based CME Group’s Bitcoin and Ether futures markets is just 1.8% away from their respective all-time highs. The increase in the number of outstanding contracts indicates increased interest in crypto-related exposures and hedging among US financial institutions.
“Bitcoin’s all-time high should be tested in the short term, with the key 70,000 level providing strong resistance,” Moron said.
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