Bitcoin rises 39.7% in Feb, heads for biggest monthly gain since Dec 2020

Bitcoin (Photo: Bloomberg)

Bitcoin inched close to $60,000 on Wednesday, rising 39.7 per cent in February, which would mark its largest monthly rally since December 2020. Bitcoin was up 4.3 per cent and was trading at $59,244, its highest since December 2021.

In the last four months, the price of the token has doubled. Moreover, the value of all the Bitcoin in circulation has topped $2 trillion this month for the first time in two years. During the bear market in 2022, when the FTX and other crypto platforms collapsed, the cap had fallen to about $820 billion.

“This surge can be attributed to the substantial trading activity, totalling $3 billion, in Bitcoin spot ETFs, showing increasing demand in the market,” added Edul Patel, CEO at Mudrex.

The bigger bitcoin exchange-traded funds (ETFs), which were listed in the US on January 11, have seen a definite pickup in interest this week. The three most popular, run by Grayscale, Fidelity and BlackRock, have seen trading volumes surge, according to Reuters.

“Blackrock now has around $7 billion in Bitcoin holding and Fidelity has around $5 billion, which are phenomenal numbers for a newly launched ETF,” said Parth Chaturvedi, investments lead at CoinSwitch Ventures.

Another report by Bloomberg suggested that since their launch on January 11 this year, the Bitcoin ETFs have attracted investments to the tune of $5.6 billion.

Patel said that the surge is also due to the anticipation around the Bitcoin halving, which is expected to take place in April.

“The approaching Bitcoin halving event, a historical catalyst for price surges, adds to the positive outlook,” he said. Bitcoin halving is designed to slow the release of the token, leading to a fall in supply and, subsequently, a rise in its prices.

“With daily Bitcoin generation set to fall from 900 to 450 and constant demand of over 2000 Bitcoin in inflows by the new ETFs, this imbalance will result in price appreciation,” Chaturvedi added.

In the coming days, experts suggest Bitcoin is poised to top its all-time high of around $69,000.

“Given the current trajectory of increasing demand and optimistic sentiment among investors, there is a strong likelihood that Bitcoin will exceed its previous all-time high soon,” said Patel.

“After the halving event, the supply pressure will increase further and may take Bitcoin value even higher,” Thakral said. “We can expect Bitcoin to touch the $100,000 mark by the end of 2024 if macroeconomic factors remain favourable.”

First Published: Feb 28 2024 | 4:22 PM IST

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