Bitcoin, the world’s leading cryptocurrency, reached a significant milestone as its total market value surpassed $1 trillion for the first time since November 2021. This surge has been fueled by substantial inflows to U.S. spot Bitcoin exchange-traded funds (ETFs). Bitcoin’s price hit a 25-month high of $52,079 on Wednesday. As the cryptocurrency continues its upward trajectory, investors are eyeing its potential for further growth.
Rising price and market cap
At 6:27 AM GMT today, the cryptocurrency saw a 0.097 percent increase, reaching $51,908.60. This surge in the cryptocurrency’s price has contributed to a market capitalization exceeding $1.013 trillion, according to data from Coingecko. This surge represents more than a 22 percent increase since the beginning of February, positioning the cryptocurrency for its most significant monthly rise since October.
Role of U.S. spot Bitcoin ETFs
Analysts attribute a significant portion of the cryptocurrency’s recent price increase to strong inflows into new U.S.-listed ETFs. These ETFs have provided investors with easier access to Bitcoin exposure, driving capital flows into the cryptocurrency market. Data from LSEG Lipper reveals that inflows into the 11 U.S. spot Bitcoin ETFs reached $1.64 billion in the week leading up to Wednesday, with the products receiving regulatory approval and commencing trading in January.
On Wednesday, a U.S. court approved bankrupt cryptocurrency lender Genesis Global Capital to liquidate approximately $1.6 billion worth of shares in Grayscale Investments’ spot bitcoin ETF as a step towards repaying its creditors.
Therefore, the price increase was influenced partly by rising demand for the cryptocurrency due to the recent introduction of U.S. spot bitcoin ETFs. Moreover, the previous concerns over outflows from the Grayscale Bitcoin ETF, which had dampened market sentiment in recent weeks, have significantly eased.
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Market dynamics
Bitcoin’s market cap had previously reached an all-time high of $1.28 trillion in November 2021. However, the recent surge indicates renewed optimism and confidence in the cryptocurrency market. Investments in Bitcoin currently constitute more than half of the $2.01 trillion total market value of cryptocurrencies, which includes Ethereum and other digital assets.
Notably, the surge in Bitcoin’s price has also had a positive spillover effect on U.S.-listed cryptocurrency companies. Shares of companies such as Coinbase, Riot Platforms, and CleanSpark witnessed notable gains on Wednesday, reflecting the broader market sentiment toward cryptocurrencies.
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