
Bitcoin surged to record highs on Friday in a trading session marked by volatility, reflecting the continued enthusiasm for cryptocurrencies within the investment community.
The leading cryptocurrency surpassed the $70,000 mark for the first time, fueled by investor interest in new U.S. exchange-traded crypto products and speculation of a global interest rate cut. Bitcoin reached a peak of $70,105 before retreating quickly, settling at $68,317.72 at the last recorded trade.
This latest rally comes amidst a surge in investments into crypto-focused ETFs (Exchange-Traded Funds) over the past few weeks. Additional market support stems from the anticipated upgrade of the Ethereum blockchain platform (home to Ether, the second-largest cryptocurrency) and the upcoming Bitcoin “halving” event in April, which will restrict the rate at which new Bitcoins are minted.
However, concerns linger regarding the speculative nature of cryptocurrencies. After reaching a record high on Tuesday, Bitcoin witnessed a sharp reversal, plunging over 10% and falling below the $60,000 threshold.
“Navigating previous highs is notoriously challenging,” commented Antoni Trenchev, co-founder of Nexo, a crypto lending platform. “Bitcoin’s price resistance rarely breaks on the first attempt. Volatility is a defining characteristic of Bitcoin bull markets, and 2024 can be expected to see several sudden and significant price drops of 10-20%.”
The U.S. Securities and Exchange Commission’s approval of 11 spot Bitcoin ETFs in late January marked a turning point for the cryptocurrency industry, following a period of decline known as the “crypto winter.” This period, lasting 18 months, was marred by high-profile corporate bankruptcies and scandals.
The market has also witnessed a shift in investor behavior. Institutional investors, who previously avoided cryptocurrencies due to their extreme price fluctuations, are now allocating long-term funds to the sector. Analysts suggest this trend could contribute to the sustainability of the current rally.
Data from LSEG indicates that net inflows into the top 10 U.S. spot Bitcoin funds totaled $2.2 billion for the week ending March 1st. Notably, BlackRock’s iShares Bitcoin Trust received over $2 billion of that investment.
The recent surge in Bitcoin’s price has positively impacted other digital tokens as well. Ether, the second most valuable cryptocurrency globally, has risen by more than 60% since the year’s beginning. Ether closed the trading session 1.62% higher at $3,939.84.
Companies associated with the cryptocurrency market also experienced gains on Friday. Coinbase, a leading cryptocurrency exchange, saw its share price rise by 8.2%. Crypto mining firms Riot Platforms and Marathon Digital witnessed gains of 5.1% and 9.6% respectively.