Bitcoin hit $60,000 on Wednesday for the first time in more than two years, as a flurry of capital into new US bitcoin exchange-traded funds (ETFs) fuelled a 42% price rally in February, its best month since December 2020.
Bitcoin was last up 6% at $60,131, its highest since November 2021, when it set a record of $68,789. Bitcoin was also heading for its largest week-on-week gain in a year, up 18.5% since Feb 21.
Bitcoin has more than tripled in value since the start of last year, climbing back from a 64% plunge in 2022, in a remarkable comeback from a series of crypto-industry scandals and bankruptcies that had raised questions about the viability of digital assets.
Traders have poured into bitcoin ahead of a “halving” event — a process designed to slow the release of the cryptocurrency — in April. In addition, the prospect of the Federal Reserve delivering a series of interest-rate cuts this year has stoked investor appetite for higher-yielding or more volatile assets.
“Bitcoin is being driven by the support of consistent inflows into the new spot ETFs, the outlook for April’s halving event and June’s (expected) Fed interest-rate cuts,” said Ben Laidler, global markets strategist at the retail investment platform eToro.
The value of all the bitcoin in circulation has topped $2 trillion this month for the first time in two years, according to the crypto platform CoinGecko, while the price of the token itself has doubled in just four months.
The bigger bitcoin ETFs have seen a definite pickup in interest this week. The three most popular, run by Grayscale, Fidelity and BlackRock, have seen trading volumes surge.
On Monday and Tuesday, around 110 million shares in the biggest three changed hands, about 51% of the 215 million shares traded in the market’s most valuable companies — Apple, Microsoft and Nvidia, according to LSEG data.
Three weeks ago, this percentage was closer to 15%.
“Essentially, we’re seeing the ETF effect ahead of schedule,” said Joseph Edwards, head of research at Enigma Securities, said. “Inflows into them stepped up quickly last week and have been sustained, and we think it’s reflective of advisers getting out there very quickly to start selling the ETFs to clients.”
LSEG data showed flows into the 10 largest spot bitcoin ETFs brought in $420 million on Tuesday alone, the most in almost two weeks.
“If $60,000 doesn’t whet the appetite, consider that 70% of bitcoin supply has remained unmoved for a year, and the little that’s left is being hoovered up by the likes of BlackRock and Fidelity, just as rewards for miners are about to be slashed in half. The stars are aligning for bitcoin,” said Antoni Trenchev, the cofounder of the crypto exchange Nexo.
The crypto investor and software firm MicroStrategy earlier this week disclosed it had recently bought about 3,000 bitcoins for $155 million, while the social media platform Reddit also said in a regulatory filing it had bought small amounts of bitcoin and ether.
Ether, which underpins the ethereum blockchain network, rose 3.2% to $3,353, having hit another two-year high earlier in the day. The price has risen 47% in February, the biggest monthly gain since a 70% rally in July 2022.
Some investors are hoping US regulators will also approve applications for ETFs based on spot ether, the second-largest digital token.
Enigma Securities’ Edwards said the run higher felt reasonably steady.
“There certainly isn’t a manic feeling to who’s buying and why — ether gaining against the field also speaks to a more measured environment — but there’s at least a little FOMO (fear of missing out) going on right now,” he said.