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Bitcoin Nears $60,000 in Fifth Day Rally, Driven by US Spot ETF Inflows and Rate Cut Anticipation

Bruno T
Latest News
February 28 2024 1:45AM

Bitcoin (COIN:BTCUSD) experienced a significant surge, reaching close to $60,000 on Wednesday, marking its fifth consecutive day of gains. This rally, driven by substantial inflows into newly launched U.S. spot bitcoin exchange-traded products (ETPs), has propelled Bitcoin nearly 40% higher in February alone, potentially its biggest monthly increase since December 2020.

As of the latest reports, Bitcoin’s value climbed by 4.5% to $59,244, reaching its peak since December 2021. This surge is attributed to investors flocking to Bitcoin in anticipation of the halving event in April—a mechanism designed to reduce the rate at which new bitcoins are generated. Moreover, the anticipation of potential rate cuts by the Federal Reserve this year has heightened investor interest in assets with higher yields or volatility.

Ben Laidler, a global markets strategist at eToro, highlighted that the momentum behind Bitcoin is supported by consistent inflows into spot ETFs and optimism surrounding the upcoming halving event and anticipated Fed rate cuts in June.

This month, the total market value of Bitcoin surpassed the $2 trillion mark for the first time in two years, as reported by CoinGecko. In just four months, the price of Bitcoin has doubled.

Significant interest has been observed in the major Bitcoin ETFs this week, particularly those managed by Grayscale, Fidelity, and BlackRock, which have seen a surge in trading volumes. Data from LSEG indicated that approximately 110 million shares of the top three ETFs were traded on Monday and Tuesday, accounting for about 51% of the total shares traded in the market’s most valuable companies, such as Apple, Microsoft, and Nvidia. This is a substantial increase from 15% just three weeks prior.

Joseph Edwards, head of research at Enigma Securities, noted the early impact of ETF inflows, with a notable increase last week that has continued. This trend reflects advisors’ swift actions in promoting these ETFs to their clients.

On Tuesday alone, the ten largest spot Bitcoin ETFs recorded inflows of $420 million, marking the highest in nearly two weeks, according to LSEG data.

In related developments, MicroStrategy disclosed its recent purchase of approximately 3,000 bitcoins for $155 million, and Reddit announced in a regulatory filing its acquisition of small amounts of Bitcoin and Ether.

Ether, the world’s second-largest cryptocurrency and the foundation of the Ethereum blockchain network, also saw a 2.2% increase to $3,320, reaching a two-year high earlier in the day. Ether’s price has surged by 47% in February, its largest monthly gain since a 70% rally in July 2022.

Investors are hopeful that U.S. regulators will approve spot Ether ETF applications, with Edwards from Enigma Securities describing the current market uptrend as steady, with a mix of cautious buying and a slight sense of FOMO (fear of missing out).