Bitcoin or BTC – the world's largest cryptocurrency – hovered around the $70,000 mark on March 12. BTC has skyrocketed, surpassing its previous all-time highs and setting a new record of $72,738 with a market cap of nearly $1.41 trillion.
The cryptocurrency Fear and Greed Index is in the extreme greed zone. Bitcoin price rose to $72,738, setting a new all-time high and surpassing its previous highs. Bitcoin recently hit $72,000, ahead of the highly anticipated Bitcoin halving event, which is expected to propel the cryptocurrency to unprecedented highs.
Bitcoin price hits a 2-year high and sets a new record of $72,000
Bitcoin price hits its new all-time high of $72,738 after two years and the rise is driven by growing interest in spot Bitcoin ETFs. According to data from Farside Investors, ETFs have risen to a stellar $6.7 billion since the Securities and Exchange Commission gave them approval earlier this year. These Bitcoin ETFs attract an average daily inflow of around $332 million.
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In recent months, the surge has been driven by institutional allocation and also increased participation from retail investors due to the spot Bitcoin ETF application in the US and of course the upcoming Bitcoin halving. Meanwhile, the rise coincides with a broader rally in the cryptocurrency market. ETH has also reached the $4,035 level.
Parth Chaturvedi, the head of investments at CoinSwitch Ventures, says tracking these flows should be a strong indicator of future price movements, as increased demand along with the upcoming supply reduction (due to the fourth halving) could lead to an upward movement in prices.
However, retail investor participation is nowhere near what it was in 2021. “We can expect interest in crypto as an asset class to become more mainstream,” says Chaturvedi.
How does the inflow of $678 million into Bitcoin ETFs affect the price of Bitcoin?
Last month was brilliant for Bitcoin ETFs as they recorded around $678 million in inflows by the end of the month. This massive inflow came as the BlackRock iShares ETF alone saw an inflow of $520 million.
According to BitMEX research data, the BlackRock iShare ETF is currently leading the spot Bitcoin ETF inflows, recording a net inflow of around $678 million by the end of February, totaling around $520 million alone. Until launch, this was the third largest inflow as all nine spot Bitcoin ETFs achieved massive trading volumes. The ETF's net inflow was over $6.5 billion and its asset holdings were over 1,41,000 BTC. The Fidelity Bitcoin ETF recorded $126 million and Ark 21Shares saw a net inflow of $5.4 million. Other spot ETFs also saw solid inflows, showing strong bullish sentiment among both institutional and retail investors.
On the other hand, Grayscale's GBTC recorded an outflow of $125.6 million, up from the outflow of $22.4 million, abandoning hopes of a standard shift.
After an extraordinary price surge on March 11, 2024, BTC reached $72,000, setting a new all-time high before the Bitcoin halving. Subsequently, spot Bitcoin ETFs experienced a significant decline, with total net inflows falling from $678.67 million on February 29 to $332.08 million on March 7, 2024, The Block reported.
As BTC continues to surpass its all-time high, investments from major institutional players like BlackRock and MicroStrategy appear to be paying off.
Let's take a look at the current portfolios
MicroStrategy, a business intelligence company, has impressively expanded its portfolio of digital assets, overtaking BlackRock. BlackRock currently holds 197,943 BTC, while MicroStrategy has accumulated 205,000 BTC, worth about $821.7 million.
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FCA – Crypto Asset Exchange Traded Notes for professional investors
On Monday, the UK Financial Conduct Authority announced that it would now allow recognized investment exchanges to launch cryptocurrency-backed exchange traded notes (cETNs), becoming the latest regulator to pave the way for digital assets.
The Financial Conduct Authority (FCA) has stipulated that these products are only available to professional investors such as credit institutions and investment firms that are authorized to operate in the financial markets. However, the FCA warned that cETNs, bonds issued by financial institutions that track the performance of underlying assets, could potentially harm retail investors.
The FCA said exchanges must continue to ensure sufficient controls are in place to make it affordable for professional investors to trade in an orderly and appropriately protected manner. cETNs must comply with all conditions of the UK listing regime, including ongoing disclosure and prospectuses. The FCA believes that cETNs and crypto derivatives are unsuitable for retail clients due to the harm they cause.
Therefore, the ban on selling cETNs to private customers remains in place. The FCA continues to remind investors that digital assets are extremely risky and largely unregulated.
BTC hits $72,000 – is this a sign of a bull run or a bull trap?
The rise in Bitcoin prices and reaching its new all-time high at $72,738 after two years is a sign of a bull run or a bull trap. Investors should be careful. Bitcoin is trading tremendously well, some traders think it is a bull trap and others are bullish on BTC's rise.
The cryptocurrency market is doing great, but investors need to be careful as sudden increases can also represent the possibility of a bull trap. There are many reasons for BTC to rise even more and reach a new all-time high. Some of the reasons include spot Bitcoin ETFs, Bitcoin halving, and ETH dencun upgrade.
The last time BTC price was above $57,000 was in 2021 when the price peaked and began its reversal into a sustained bear market. At the start of 2022, the price had fallen to $32,987, a decline of almost 42%. The current market has the same similarities and therefore could be a bull trap. Forbes Advisor India recommends investors to be cautious when trading BTC.
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Bottom line
The excessive excitement over the US approval of a Bitcoin futures ETF has sparked optimism across the crypto industry. This has opened wide opportunities for investors to jump on the BTC bandwagon, driving up prices and demand.
This is a good opportunity for investors to profit from the Bitcoin surge as it is driven by the Bitcoin halving and ETH Dencun appreciation, but only with extreme caution. As we all know, the crypto market is highly unpredictable and history shows that BTC is extremely volatile, with past price movements suggesting that BTC prices have lost more than a third of their value. The current surge could just be an imaginary bull trap, no one can be sure.
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