What are the main factors driving today’s surge in the cryptocurrency market?
The cryptocurrency market has seen a remarkable recovery, led by Bitcoin, the pioneering cryptocurrency, surpassing the $51,500 milestone and achieving an impressive $1 trillion in market capitalization.
This is the first time since 2021 that Bitcoin has reached such levels. The last time it did, in December 2021, it experienced a significant drop of $16,000 by the end of 2022. As the cryptocurrency market witnesses this resurgence, several factors contribute to the recent rally in Bitcoin and other cryptocurrency prices.
A significant factor behind Bitcoin’s recent surge is the substantial inflows into Spot Bitcoin ETFs, with a staggering $631 million recorded on February 13 alone. BlackRock’s iShares Bitcoin ETF (IBIT) led the way with a remarkable $493 million inflow, surpassing its competitors by a wide margin. Fidelity recorded the second-best inflows at $163 million. In contrast, GBTC outflows have slowed down, staying under $100 million over the past three days this week. The net inflows into Bitcoin ETFs now total $3.7 billion, with BlackRock witnessing $4.6 billion in net inflows and GBTC experiencing $6.5 billion in net outflows.
Additionally, the awaited U.S. Consumer Price Index (CPI) report had an impact on yesterday’s price drop in Bitcoin. Projections indicate a 3.7% increase in January’s core CPI, marking the smallest annual gain since April 2021. Moreover, the overall CPI is expected to rise by less than 3% for the first time in two years. These indicators suggest the Federal Reserve’s successful anti-inflation efforts, potentially setting the stage for future interest rate cuts.
Investors are also closely watching the upcoming Halving scheduled for April, a historical catalyst for significant price rallies. This strategic event, aimed at reducing the rate of Bitcoin’s supply, has the potential to ignite a surge in its value.
Furthermore, Deribit, a crypto derivatives exchange, has reported a significant increase in open Bitcoin call options at strike prices of $60,000, $65,000, and $75,000 as the expiry date on February 23 approaches.
With these factors contributing to the prevailing bullish sentiment, investors remain cautiously optimistic about the future paths of both Bitcoin and Ethereum prices.
Bitcoin has experienced a notable 20% surge in the last seven days, breaking the $51,500 mark and showing a 2.72% increase within the past 24 hours. As the cryptocurrency continues its upward trajectory, some experts predict that Bitcoin will reach the $55,000 mark in the upcoming days. The bullish sentiment in the market suggests potential further gains for the leading cryptocurrency.