Economy & Business

    Cryptoverse: Breezy bitcoin reclaims $1 trillion crown

    The Hawk
    February20/ 2024
    Last Updated:

    Bitcoin Hits $52,005, Surpasses $1 Trillion Market Value. US Approves Bitcoin ETFs, Triggering a $2 Trillion Surge. Coinbase Reports First Profit in Two Years Amid Robust Trading Volumes.

    Bitcoin Image

    The world's largest cryptocurrency has leapt 22 per cent this year to $52,005, pushing it past a market value of $1 trillion mark for the first time since its record heyday of late 2021.

    Its resurgence has electrified the broader cryptocurrency market, including ether and other digital coins, which has now exceeded $2 trillion, as per data from CoinGecko.

    The sector has been bolstered by the US regulatory approval of several spot bitcoin exchange-traded funds (ETFs), from BlackRock and Fidelity among others, which allow access to the crypto coin vis regular stock exchanges.

    The US spot ETFs added 60,000 bitcoin in the first month of their launch, more than twice the miner production in the same period, brokerage Bernstein said.

    "The amount of flows far outstrips anyone's expectation," said Mark Connors, head of research at Canada's 3iQ Corp.

    Crypto trading volumes are also robust.

    Total spot trading volumes on centralized exchanges rose 4.4 per cent to $1.4 trillion in January, recording the fourth consecutive monthly increase and the highest reading since June 2022, a report by London-based researcher CCData said.

    The resurgence of interest helped the largest listed crypto exchange Coinbase Global post its first quarterly profit in two years last week .

    "The bitcoin appreciation is contributing to better spot bitcoin ETF flows, which is in turn driving bitcoin prices higher, and pulling other tokens higher as well," J.P.Morgan analysts said.

    $150,000 BITCOIN IN 2025?

    Many industry watchers say the outlook is looking bright at the moment, with investors buying bitcoin ahead of the blockchain's "halving" - a preplanned process that reduces mining rewards in half every four years - due in April.

    Gautam Chhugani, analyst at Bernstein, expects 2024 to be a break-out year for cryptocurrencies where bitcoin hits all-time highs followed by a peak of $150,000 by mid-2025.

    "This optimistic outlook is bolstered by the expectation of an upcoming halving event and the possibility of interest-rate reductions," CCData analysts said.

    While bitcoin remain 32 per cent away from its record high of $69,000, it notched an all-time high against the Japanese yen at 7,919,000 yen last week.

    Beware Greedy Correction

    It's not all crypto high-fives: There are some signs the market is being by investors driven by FOMO.

    CoinGlass' Crypto Fear Greed Index, a scale of 0 to 100 where zero denotes "extreme fear" and 100 signals "extreme greed", hovered at 72. Usually when investors get too greedy, it signals the market is due for a correction.

    Riskier assets such as bitcoin could be threatened by persistently high interest rates; traders' have pushed back bets of a rate cut to June from March following a string of strong US economic data.

    "While we remain bullish with liquidity rushing back into risk assets, inflation being sticky over 3% remains a downside risk and would also mean increased volatility across markets," analysts at crypto trading firm QCP Markets said.