(Bloomberg) Few obstacles seem to be in the way of Bitcoin’s current rally. The largest cryptocurrency rose for the second day and marched closer to its all-time high, driven by expectations of exchange-traded funds’ robust demand at the week’s start.
The leading cryptocurrency recently surged to a peak of $65,010, marking its first breach of the $65,000 threshold since November 2021. However, it slightly retraced to $64,917 by 8:28 a.m. London time.
Driving this heightened activity in the primary digital asset is an apparent unquenchable demand from Bitcoin ETFs listed in the United States, which commenced trading on January 11. Over the past year, Bitcoin has witnessed a remarkable 186% surge.
Since the inception of US Bitcoin ETFs, substantial net inflows of $7.35 billion have been injected by major fund entities such as BlackRock Inc. and Fidelity Investments. Notably, even substantial outflows of nearly $9 billion from Grayscale Bitcoin Trust since the ETFs' listing have failed to deter traders.
The anticipation of continued ETF inflows and a subsequent price rally has fueled the weekend's upward market movement. Traders are speculating that the cryptocurrency's price is on the verge of surpassing its previous record of nearly $69,000, achieved during the November 2021 Covid pandemic peak. The strong demand for ETFs and fears of missing out ahead of the impending Bitcoin halving in April further amplify these expectations. The halving event, which occurs when mining rewards are halved, could potentially reduce coin supply growth, intensifying the demand pressure.
In addition to Bitcoin's ascent, alternative cryptocurrencies or "altcoins" like Cardano and Solana experienced gains of 8% and 1% on Monday.
The surge in Bitcoin's value has also spilled over smaller, meme coins. Dogecoin saw a nearly 20% increase, while Shiba Inu witnessed a 34% rise in the last 24 hours.
This market environment draws parallels to the 2021 bull run, with retail traders seeking quick profits from the surging prices of highly volatile tokens, especially meme coins. Crypto derivatives trading, reflecting traders' positions, indicates a bullish sentiment. Open interest in CME Group's Bitcoin and Ether futures market is just 1.8% away from their respective record highs, signaling increased interest and hedging activity among US institutions.
Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets, suggests that the short-term testing of Bitcoin's all-time highs is imminent, with the crucial resistance level of $70,000 looming large.