Bitcoin, the largest cryptocurrency by market value, has achieved a remarkable milestone by regaining the $1 trillion market cap for the first time in over two years. The digital asset surged above $51,000 on Wednesday, February 14, 2024, following a strong rally that began in January last year.
Bitcoin ETFs boost demand
One of the main drivers of the recent price increase is the approval and listing of Bitcoin spot exchange-traded funds (ETFs) in the US on January 11. Nine such ETFs debuted on the same day, and more than decade-old Grayscale Bitcoin Trust converted into an ETF as well. The accessibility of ETFs promises to widen the investor base for Bitcoin and increase its legitimacy as an asset class.
The new funds have attracted about $9 billion so far, according to Bloomberg. “From January 1 to January 10, Bitcoin trading volumes grew from $16 billion to $50 billion – a 300 per cent increase. This is the impact of the approved Bitcoin ETF,” said Ryan Lee, chief analyst at Bitget Research.
Some of the best-performing Bitcoin ETFs of February 2024 are:
- iShares Bitcoin Trust ETF (IBIT), with an expense ratio of 0.12% and assets under management (AUM) of $2.7 billion.
- Invesco Galaxy Bitcoin ETF (BTCO), with an expense ratio of 0% and AUM of $300 million.
- Bitwise Bitcoin ETF (BITB), with an expense ratio of 0% and AUM of $623.1 million.
- ProShares Bitcoin Strategy ETF (BITO), with an expense ratio of 0.95% and AUM of $1.8 billion.
Bitcoin halving fuels scarcity
Another factor that has contributed to the surge is the anticipation of Bitcoin halving, which is scheduled to take place in April this year. Bitcoin halving cuts the quantity of Bitcoin that miners receive for operating the powerful computers that verify transactions on the blockchain. It is often viewed as support for prices based on historical precedent.
According to Lee, the first halving occurred in November 2012. Within one year, the price of Bitcoin rose from $13 to $1,152 and reached its peak one year and one month after the halving. The second halving occurred in July 2016, when the price of Bitcoin rose from $664 to $17,760, reaching its peak one year and five months after the halving.
Bitcoin has more than tripled in value since January 2023. However, it continues to be far below its peak of $69,000 achieved in November 2021. Experts believe that the upcoming halving may lead to the token retesting its all-time high level in the near future.
Conclusion
Bitcoin has shown remarkable resilience and growth in the past year, despite regulatory uncertainties and market volatility. The launch of Bitcoin ETFs and the anticipation of Bitcoin halving have boosted its demand and scarcity, resulting in a surge above $51,000 and a market cap of $1 trillion. Investors who are interested in gaining exposure to this popular digital asset can consider investing in one of the many Bitcoin ETFs available in the market.
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