By Suvashree Ghosh
Bitcoin approached $45,000 for the first time in almost a month with the US exchange-traded funds holding the digital currency seeing a steady inflow of cash from investors and risk appetite rising across financial markets.
The largest cryptocurrency rose as much as 1.6% to $44,872 on Thursday. Bitcoin last traded above $45,000 on Jan. 12, the day after the ETFs began trading. After being weighed down initially by outflows from the Grayscale Bitcoin Trust, the funds have seen net inflows for nine consecutive trading sessions.
“Bitcoin appears set to resume its march up after the Grayscale outflows finally tapered off,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets.
“We expect the Bitcoin halving narrative to gather momentum over the next few weeks, which should help drive a rally through the psychologically important $50,000 level,” Mauron said, referencing the event anticipated in April where the blockchain’s network protocol will reduce rewards for verifying transactions by half.
The quadrennial halving cuts the quantity of Bitcoin that miners receive for operating power-hungry computers that secure the network by solving complex puzzles. Halving is key to capping the supply of Bitcoin at 21 million tokens. Rewards drop to 3.125 coins per block from 6.25 coins in the upcoming event.
Digital tokens initially surged at the start of the year, extending an intense bull-run which saw Bitcoin rising by nearly 160% in 2023, outpacing gold and stocks. Much of that rally was attributed to anticipation of the SEC approving launch of the spot Bitcoin ETFs in the US. It did so on Jan. 10, allowing almost a dozen issuers to offer spot BTC ETFs.
First Published: Feb 08 2024 | 7:43 PM IST
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