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The fuel that ignited Bitcoin's price explosion

Key Takeaways
  • Bitcoin surged to a two-year peak, hitting almost $57,000 in Asian trading, marking a major milestone in its journey.
  • MicroStrategy's significant Bitcoin acquisition and the approval of Bitcoin-based ETFs in the U.S. have contributed to the rally.
  • Bitcoin short sellers are facing substantial losses as Bitcoin surged nearly 10% to briefly reach a new yearly high of $57,000.
27-Feb-2024 By: Lokesh Gupta
The fuel that ignite

Bitcoin's has surged 260% since its November 2022 low

Bitcoin, the market's leading player, has seen its price skyrocket in recent hours, rising by more than 10% and reaching the desired $57,000 level. This spike follows around twelve days of very quiet trading, during which Bitcoin remained in a narrow band of $50,500 to $52,500, with no enthusiasm.

However, things changed abruptly when bullish momentum took over, bursting through resistance levels and driving the price up by a significant 10%. This increase has pushed Bitcoin to its highest point in 26 months, suggesting a strong optimistic mood in the cryptocurrency market.

Reason Behing The Bitcon Rally:

ETF Volume Surge

The rapid increase in Bitcoin's price has resulted in large losses for short positions, reaching more than $268 million in the previous 24 hours, with Bitcoin shorts alone accounting for $158 million in losses. The market activity for Bitcoin and its Spot ETF equivalents today is positive, with a high trading volume over $3.3 billion.

BlackRock's spot Bitcoin ETF has stood out, with transactions worth $1.3 billion, followed by Grayscale and Fidelity, which contributed $843.7 million and $587.3 million, respectively. Other prominent firms, such as Ark Invest, Bitwise, and Invesco, have also contributed significantly to the day's trading volume, demonstrating the cryptocurrency market's strong optimistic mood.

Other ETFs, including WisdomTree, VanEck, Franklin, Valkyrie, and Hashdex, also traded today, but in lower amounts. This collective investing activity reflects increased trust and interest in Bitcoin and its ETF counterparts, which fuels the market's current positive momentum.

Microstrategy's Bitcoin Holding

The increase in Bitcoin's price can be linked to Microstrategy's recent acquisition of an additional 3000 BTC at an average price of $51,813, totaling $155.4 million, made late Monday. With this buy, MicroStrategy's overall cryptocurrency holdings now total 193,000 BTC, accounting for roughly 1% of Bitcoin's total circulating supply, which is limited at 21 million. Microstrategy's huge investment has most definitely contributed to the bullish trend noticed in the Bitcoin market, cementing its position as a prominent player in the sector.

Bitcoin ETF options

Bitwise and Grayscale are eagerly awaiting SEC approval to expand their investment strategies, which could potentially pave the way for Bitcoin ETF options. The SEC is currently reviewing a proposal to permit the trading of options for Bitcoin ETFs, including those offered by Bitwise and Grayscale Bitcoin Trust, at the request of NYSE. If approved, these Bitcoin ETF options would resemble options available for other ETFs, with regulations covering aspects such as listing criteria and trading suspensions. Moreover, BlackRock is considering listing options on its Bitcoin ETF with CBOE, underscoring the growing institutional interest in crypto derivatives.

Federal Reserve

Anticipation of a rate cut at the next Federal Reserve meeting in 2024 has bolstered optimism for Cook. Coingabbar analysts view the potential rate decrease as a sign of enhanced support for crypto market transactions.

Upcoming Global Election

Moreover, the success of a political party endorsing Bitcoin in a smaller nation like El Salvador, along with a presidential candidate in the upcoming US election backing BTC in their campaign, is drawing new supporters to the investment, further driving up prices.

Bitcoin Halving

As the bitcoin halving approaches in little over a month, there is rising expectation for potential price hikes that have traditionally been connected with this event. half is a programmed feature of the Bitcoin network that reduces inflationary pressures by half the rewards for successfully mining a bitcoin block. This change makes acquiring or mining new bitcoins more difficult and has traditionally been followed by times of big price increases, indicating future positive market trends.

Each of the three prior halvings has resulted in a new record high within 12 to 18 months. For example, during the most current halving on May 11, 2020, Bitcoin hit a cycle high of $69,000 in November 2021.

If Bitcoin keeps following its past trends, reaching $100,000 seems possible. But experts warn about the chance of prices bouncing around before that happens. Still, with Bitcoin values expected to rise, it looks like the cryptocurrency market might see a big boost in 2024.

Also Read: Bitcoin Price Prediction: Will it Plummet or Rally Next

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