Crypto Analyzer

The Rise of Bitcoin: Crypto Market Hits All-Time Highs with Record Inflows

Bitcoin, the original cryptocurrency, is on a record-breaking streak, propelled by an influx of capital into crypto products and anticipation of a reduction in the token’s supply growth. Recently, Bitcoin hit an all-time peak of nearly $72,881 and continues to trade at high levels, reaching $72,220 during Tuesday morning in London. The past week saw a record $2.7 billion pouring into crypto assets, with a significant portion of the inflows directed towards Bitcoin. Both Bitcoin and other top cryptocurrencies have surged by around 70% since the start of the year.

The launch of spot Bitcoin exchange-traded funds (ETFs) in the United States in January has played a pivotal role in boosting momentum. Notable financial institutions such as BlackRock Inc. and Fidelity Investments have introduced ETFs that have collectively attracted approximately $9.5 billion in investments. Furthermore, developments such as the London Stock Exchange accepting applications for Bitcoin and Ether exchange-traded notes and Thailand signaling the opening of overseas crypto ETFs to retail investors have added to the growing institutional interest in the crypto space.

Ophelia Snyder, the co-founder and president of 21Shares, highlighted the increasing institutional adoption of Bitcoin in the US, emphasizing that it is still in the early stages. This influx of institutional players has reshaped the dynamics of the Bitcoin market, including a greater emphasis on US trading hours.

Bitcoin Graph
Source: Bloomberg

Market analysts and technical experts foresee further gains for Bitcoin in the near future. Tony Sycamore from IG Australia Pty projects a potential push towards $80,000 in the coming months, while Katie Stockton of Fairlead Strategies LLC believes that reaching $80,000 is a plausible target in the medium term.

On the derivatives front, the open interest in Bitcoin futures at the Chicago-based CME Group has hit a new peak, surpassing 30,000 contracts for the first time. This surge indicates a rising demand for crypto exposure and hedging among US institutional investors.

Bitcoin Futures Market
Source: Bloomberg

The ongoing rally in Bitcoin has been generating approximately 1,500 new “millionaire wallets” daily, according to data from Kaiko Research. However, the distinction between individual and corporate wallets is challenging to ascertain based on blockchain data. While the current pace of millionaire wallets being created daily is lower than during the 2021 bull market, the crypto market sentiment remains optimistic due to factors such as upcoming supply halving, ETF demand, and expectations of looser monetary policies.

As the crypto space continues to evolve, with increasing institutional participation and market developments, Bitcoin’s resurgence is defying previous market downturns and attracting a new wave of investors.

©2024 Bloomberg L.P.