In a spectacular comeback, Bitcoin has surged by 22% in the early months of 2024, reclaiming its throne with a valuation surpassing $1 trillion for the first time since its record highs in late 2021. The revival of the world’s largest cryptocurrency has sent ripples through the broader crypto market, propelling the total market value of digital coins, including ether, past the $2 trillion mark, as indicated by CoinGecko data.
This resurgence has been fueled by the U.S. regulatory green light for several spot bitcoin exchange-traded funds (ETFs), introduced by major players like BlackRock and Fidelity. These ETFs, providing access to crypto coins through traditional stock exchanges, have witnessed remarkable success, accumulating 60,000 bitcoins in the first month, more than twice the miner production during the same period.
Mark Connors, Head of Research at Canada’s 3iQ Corp, expresses that the flow of funds into crypto ETFs has far exceeded expectations. Coinbase Global, the largest publicly traded crypto exchange, reported its first quarterly profit in two years last week, reflecting the positive impact of bitcoin’s appreciation on spot bitcoin ETF flows.
Crypto trading volumes are experiencing robust growth, with centralized exchanges witnessing a 4.4% increase to $1.4 trillion in total spot trading volumes for January, marking the highest reading since June 2022. The positive momentum is contributing to a wider acceptance of cryptocurrencies and pushing the market toward new heights.
While Bitcoin is currently 32% below its record high of $69,000, it reached an all-time high against the Japanese yen last week at 7,919,000 yen. Analysts foresee a promising outlook for the cryptocurrency, with investors showing keen interest ahead of the blockchain’s upcoming “halving” in April, a process expected to reduce mining rewards by half.
Despite the optimism, caution is advised as some indicators suggest that market sentiment is driven by FOMO (Fear of Missing Out). The CoinGlass Crypto Fear & Greed Index, currently at 72 (denoting “extreme greed”), raises concerns about a potential correction. As Bitcoin enthusiasts anticipate the upcoming halving event and possible interest-rate reductions, industry analysts warn against complacency, emphasizing the risk posed by persistently high interest rates and potential increased market volatility.
