Fueled by euphoria for fledgling spot bitcoin ETFs and Wall Street’s growing interest in cryptocurrency, bitcoin’s price blasted to an all-time high above $69,000 on Tuesday, according to crypto data platform CoinMarketCap.
The largest cryptocurrency by market capitalization dipped after reaching its all-time high and was recently trading at $63,980, down 2% over the past 24 hours. Bitcoin has risen about 50% since 10 spot bitcoin ETFs began trading on Jan. 11, a day after the SEC approved their applications following a decade of rejections. Bitcoin’s $1.3 trillion market cap has already topped its all-time high.
In a note to etf.com, Joe DiPasquale, CEO of crypto fund manager BitBull Capital, said the new high stemmed from “additional demand created by the easy onramp of BTC ETFs” coupled with the imminent halving that will reduce the reward to bitcoin miners by 50%, slowing the influx of new bitcoin into the marketplace.
“The hands holding bitcoin are now more steady,” DiPasquale wrote. “Investors are aware that it is volatile, but they have also seen it consistently reach higher highs over its existence. More investors see it as part of a well-balanced portfolio.”
The record high comes amid surging demand for the new ETFs that are based primarily on bitcoin’s price. By Friday’s market close, the 10 spot bitcoin products available for trading had generated more than $7.3 billion in inflows, despite roughly $8.9 billion in outflows from the Grayscale Bitcoin Trust (GBTC). That product differs from other offerings. GBTC is a conversion from a longer-standing bitcoin trust and charges a 1.5% fee, by far the highest among the 10 new offerings.
Bitcoin Price, IBIT AUM Soar
On Friday, BlackRock Inc.’s iShares Bitcoin Trust (IBIT) hit $10 billion in assets under management, the fastest that any exchange-traded fund has reached that milestone. The fund already ranks near the top 150 for AUM among the 3,400 currently trading, according to Bloomberg ETF Analyst Eric Balchunas.
IBIT’s Monday inflows totaled a robust $420 million, according to data from the research arm of crypto exchange BitMex. Those followed a strong week in which IBIT inflows hit $2 billion. In a Sunday note, Markus Thielen, the founder and head researcher at crypto-focused 10x Research suggested that bitcoin would reach an all-time high by the end of this week.
“Over-the-counter (OTC) trading desks are dealing with large institutional clients, and according to their aggregate inventory data, balances have decreased from nearly 10,000 Bitcoins in Q2 2023 to less than 2,000,” Thielen wrote. “This shows that institutions such as the Bitcoin ETF issuers through their market makers will have to purchase Bitcoins directly from exchanges.”
Fourteen months ago, bitcoin was trading at just $16,500 after multiple industry debacles, including the collapse of crypto exchange giant FTX, and amid macroeconomic uncertainties that had investors shying away from risk-on assets. But bitcoin’s price rose steadily as markets grew more upbeat, spiking near the end of the year as the prospects of spot bitcoin ETF approval grew more favorable. Bitcoin
“While the approval of spot bitcoin ETFs was likely the match that ignited this parabolic rally in bitcoin, most of the bitcoin that exists and most of bitcoin’s trading activity takes place outside of ETFs,” said etf.com Analyst Sumit Roy. “So, as we’re seeing, it’s possible for bitcoin to rally quite significantly even on days in which ETF inflows slow down a bit from their recent torrid pace.”
UPDATE (March 5, 2024, 16:32 ET): Updates bitcoin’s pricing information.