Bitcoin surged to another more than two-year high on Wednesday, pushing its market capitalization back above $1 trillion, as the growing success of U.S. spot bitcoin ETFs boosted investor sentiment.
The top cryptocurrency was last up 4% at $51,660.00, according to Coin Metrics. Earlier in the morning it hit $52,079.00, its highest level since December 2021. The market capitalization, or value of all bitcoin in circulation, rose above $1 trillion for the first time since late 2021, according to with CoinMarketCap.
Bitcoin is climbing to another December 2021 high, surpassing $52,000 on Wednesday.
The move came in part from increased demand for bitcoin thanks to new US spot bitcoin ETFs, as outflows from the Grayscale Bitcoin ETF (GBTC), which weighed on market sentiment for the first part of last month, have eased significantly.
“Yesterday we saw $651 million [in] inflows, the largest daily inflow since launch day,” James Butterfill, head of research at crypto asset manager CoinShares, told CNBC. “Furthermore, 12,000 bitcoins were requested from issuers yesterday at a time when only 900 bitcoins are produced each day. Investors are starting to realize that demand is starting to outpace the recently issued supply.”
About $9.5 billion in new money has entered the bitcoin market through funds since they began trading on January 11, according to data provider CryptoQuant. Over the past two weeks, more than 71% of new money invested in bitcoin came from spot ETFs, not including GBTC.
Ether it last traded 4% higher at $2,743.08 after earlier touching a May 2022 high.
Bitcoin’s rise sent related stocks higher. Trading platform Coinbase increased by 11% and bitcoin proxy Microstrategy increased 10%. miners Iris Energy and CleanSpark soared to 17% and 14%, respectively, while Marathon Digital jumped 13%.
Bitcoin surged 157% in 2023 as the U.S. Securities and Exchange Commission awaited approval for bitcoin exchange-traded funds — or ETFs — that finally came in January of this year.
Although the price of bitcoin fell after the ETF approvals, investors are still optimistic about the cryptocurrency’s setup for the year. In addition to ETF inflows, they’re also closely watching the “halving” — a supply-limiting event written into bitcoin code that happens every four years and is scheduled for April. Historically, the halving has preceded bitcoin hitting new all-time highs in the coming months.
“If the rate of bitcoin issuance slows while demand either remains flat or increases, the impact on price can be significant,” said Duncan Ash, head of product promotion strategy at Coincover. “On February 12th alone, bitcoin ETFs bought ten times the amount of bitcoins that miners could generate in one day.”
“The upcoming supply halving will reduce even more,” he added. “If the next halving follows the same pattern, we can expect continued bitcoin price growth over the coming months.”
Bitcoin is up 21% in 2024.