Bitcoin has hit a new all-time high for the first time in more than two years as this year’s rally, fueled by excitement over bitcoin exchange-traded funds and the upcoming halving event, has accelerated.
The price of the cryptocurrency topped $69,210 on Tuesday morning before retreating, according to Coin Metrics. It last traded 8% lower at $61,873.91. The crypto flagship hit its previous record high of $68,982.20 on November 10, 2021, about a year before FTX’s catastrophic failure rocked the crypto industry in what some are calling crypto’s Lehman Brothers moment.
“Bitcoin regaining its all-time high once again shows that it will never go away,” said Alex Thorn, head of research at Galaxy Digital. “In its 15 years of existence, bitcoin has seen four 75% [plus] diminishes and every time a roar comes back.”
Clara Medalie, director of research at crypto data provider Kaiko, echoed that sentiment, saying a new record is “an important psychological milestone” and “demonstrates crypto’s remarkable ability to bounce back and continue to persevere despite major headwinds.” . However, it “doesn’t have a very significant impact on the pace of innovation in the industry,” he added.
“Bitcoin becomes more useful as it becomes more valuable,” Thorn added. “At higher market caps and daily volatility, it can support larger allocations. Bitcoin’s volatility has steadily decreased over time, allowing allocations to take larger position sizes.”
Since early February, investors have been watching key themes in the bitcoin narrative push its price higher.
Catalysts driving the cryptocurrency’s rise include US spot bitcoin ETFs that began trading earlier this year, along with a tightening of bitcoin supply ahead of the late April “halving.” This event is designed to create an ellipse event around the element. The bullish trend of the flagship cryptocurrency accelerated this week.
The new record is a triumph for an industry that has long suffered from reputational and regulatory risks that appeared to be at their worst just two years ago, when failed crypto lenders fleeced crypto investors and the FTX crypto exchange collapsed. In late 2022, as traders tried to gauge the potential extent of FTX contagion, bitcoin fell to a two-year low. The cryptocurrency fell 64% that year and has been struggling to prove its legitimacy ever since.
“The odds have always been against bitcoin,” Thorn said, citing naysayers who refer to it as a “bubble” and compared it to the “tulip mania” in Holland during the 1600s. , programmatic, rare digital currency’.
It could also signal the start of a new wave of retail investors reactivating the crypto market, Needham analyst John Todaro said.
“Retail interest is often driven by momentum, and all-time highs are a key driver for even more investment,” he told CNBC. In addition, “this could lead to more capital flows, ironically, to altcoins that by comparison are starting to look cheaper,” he said.
Crypto, led by bitcoin, made a strong recovery in 2023, rising 157%. The digital asset initially received a boost from the regional banking crisis in the US and was blown away by speculation at the time that ETFs tracking bitcoin prices would receive approval from the US Securities and Exchange Commission.
Some investors remain skeptical about the new crypto class, how to value it, or whether it has any intrinsic value. Despite this, US spot bitcoin ETFs have been legitimized and become extremely popular, with BlackRock’s iShares Bitcoin Trust (IBIT) surpassing $10 billion in assets under management last week.
However, with bitcoin on a hot streak, investors entering the market here should tread carefully as unrealized margins approach extreme levels.
“The market is positioned for a sharp correction, probably between 10% and 20%,” said Ed Tolson, CEO and founder of crypto hedge fund Kbit. “Any material decline will lead to cascading liquidations in the cryptocurrency perpetual exchange markets where retail has accumulated in leveraged positions where funding rates are very high. In the coming quarters, we expect bitcoin to perform well, but with sharp corrections along the way.”
Oppenheimer’s Owen Lau agreed.
“The rise is so rapid that we are cautious about a correction,” he said. “But in the longer term, there are still catalysts to support positive price action.”
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