Bitcoin has surpassed the $57,000 benchmark, leading a rally in the cryptocurrency market. This surge marks a notable increase in Bitcoin’s value and has triggered positive momentum across various digital assets.
Bitcoin reached a significant milestone on Tuesday, surpassing $57,000 for the first time in over two years. This surge was driven by substantial investor purchases and increased demand through exchange-traded funds (ETFs), allowing the market to recover from a challenging period in 2022 following the collapse of major players like FTX, Celsius, and Three Arrows.
As the world’s largest cryptocurrency by market cap, Bitcoin’s rally not only reached a two-year high but also lifted the broader crypto market with positive developments and increased buying from crypto enthusiasts.
According to Coin Metrics, Bitcoin’s price rose by 4%, reaching $56,851.59. It briefly even reached $57,445.14, its highest point since December 2021.
This upward movement coincided with the announcement from MicroStrategy, a crypto investing and software firm, of their $155 million purchase of approximately 3,000 bitcoins on Monday. MicroStrategy, based in Virginia, already holds around 190,000 cryptocurrency tokens with a total value exceeding $10.5 billion.
Greta Yuan, the head of research at digital asset platform VDX, highlights that the latest market surge was influenced by MicroStrategy and the increasing inflows into Bitcoin ETFs.
The rally also had a positive impact on the rest of the cryptocurrency market, with Ethereum, the second-largest cryptocurrency by market cap, reaching a multi-month high above $3,200.
Additionally, crypto-related companies experienced significant gains in U.S. trading. Both MicroStrategy and Coinbase, a San Francisco-based crypto exchange, saw their stock prices rise by over 16% on Monday and continued to climb in after-hours trading. These companies’ stock prices have grown by 200% in the past year.
Alesia Haas, Coinbase’s CFO, attributes the company’s recent strong financial results to the regulatory approval of spot bitcoin ETFs in the U.S., spurring renewed interest in the cryptocurrency.
VDX’s Yuan suggests that Bitcoin’s surging price also reflects a bullish sentiment among investors, particularly in the U.S. This enthusiasm is fueled by the upcoming “bitcoin halving” event scheduled for the second half of April.
Bitcoin halving occurs every four years when the reward for bitcoin mining is cut in half, reducing the rate of new bitcoin token creation and limiting the new supply available.
Yuan adds, “As Bitcoin’s halving approaches, investors are positioning themselves for the event. The new record inflow volume of Bitcoin ETFs provides further confidence for bullish investors.”
The strong performance of bitcoin coincides with the decline of the dollar in trading on Monday and Tuesday. This is happening as the market awaits U.S. economic data that could provide insight into when the Federal Reserve might start reducing interest rates.
It is worth noting that bitcoin prices and the U.S. dollar index have historically exhibited an inverse correlation.
In terms of what to look out for, the upcoming bitcoin halving event could also drive market growth. This event reduces the amount of bitcoin rewarded during the process of “mining” the cryptocurrency. It is an integral part of bitcoin’s mathematical framework for controlling its supply and has historically led to an increase in the token’s price. Experts predict that the next halving will take place around April 2024 after a certain number of blocks in the blockchain have been mined.
One notable figure is $2.23 trillion, which Forbes estimates is the total value of the cryptocurrency market. Over the past 24 hours, the market has grown by nearly 7%. The rise in bitcoin and ether prices accounts for a significant portion of this surge, with the two cryptocurrencies making up approximately 44.5% and 17.3%, respectively, of the overall crypto market.