Bitcoin, the world’s largest cryptocurrency by market capitalization, is on the verge of achieving its most significant monthly gain in over three years. Fueled by a surge in investor interest and propelled by cash inflows into listed bitcoin funds, the cryptocurrency market is experiencing a sweeping rally, positioning the cryptocurrency within striking distance of its all-time high.
By 8:21 GMT, Bitcoin recorded a 0.88 percent increase to $63,061.30. The cryptocurrency has surged by over 44 percent in February alone, marking its most substantial monthly gain since December 2020.
As trading activity surged, Bitcoin remained resilient in Asian morning trade. It hovered around $61,100 after briefly touching heights of $63,933 overnight.
It is also propelling Etherium‘s performance. Ether saw a 2.26 percent increase to $3,463.09 today.
Market sentiment
Analysts anticipate that Bitcoin’s current trajectory may lead to a monumental breakthrough. They suggest the cryptocurrency could test and potentially surpass the $69,000 mark. Such an achievement would propel the cryptocurrency beyond its previous record high of $68,789 in November 2021. However, other analysts signaled concern over Bitcoin exhibiting characteristics of a parabolic rally. They indicated continued upward momentum without immediate signs of a market peak.
Institutional adoption
The recent approval and launch of spot Bitcoin exchange-traded funds (ETFs) in the United States have played a pivotal role in reigniting investor excitement. This also broadened access to the cryptocurrency market. Institutional players such as Grayscale, Fidelity, and BlackRock have witnessed surging volumes in their Bitcoin ETFs. Inflows from the 10 largest spot Bitcoin ETFs reached $420 million in a single day, according to data from LSEG. Additionally, the anticipation surrounding the cryptocurrency’s upcoming halving event has further incentivized traders to capitalize on the limited supply of the cryptocurrency. Hence, the supply of Bitcoin is limited to 21 million, of which 19 million have already been mined.
Read: Gold prices rise despite uncertainty over U.S. interest rate cuts
Market dynamics
Expectations of multiple rate cuts by the Federal Reserve this year have driven investor appetite for higher-yielding and more volatile assets. Moreover, foreign exchange volatility is at a two-year low and the U.S. equity volatility index is settling back to pre-pandemic levels. Therefore, Bitcoin has emerged as an attractive alternative investment option, attracting capital inflows amidst a low-yield environment.
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