Bitcoin reached unprecedented levels this Tuesday. Historical highs, which it has not reached since November 10, 2021, caused the best-known digital asset to remain at $69,191.95. After reaching this level, the cryptocurrency fell to $65,000.
Since falling to an intraday low of $38,509.61 on January 23, Cryptocurrency price increased by more than 75%. The increase in the last twelve months was 195 percent, ending with a cumulative increase of 108 percent in 2023.
The popular cryptocurrency also reached all-time highs in euro terms. historical barrier of 62,400 euros for the first timeIt showed a cumulative increase of 64.3% during the year and 199% in the last twelve months.
“The fact that Bitcoin has reached another all-time high shows that it will never go away,” says Alex Thorn, director of analysis at Galaxy Digital. “Bitcoin has experienced four declines of over 75% in its 15-year existence and has bounced back strongly each time,” he maintains.
A positive monetary policy
After a fateful 2022 that saw a 65% drop for Bitcoin as monetary policies were tightened to stop rising inflation. The United States consumer price index (CPI) ended January at 3.1%, compared to 3.4% at the end of December. It reached 9.1% in July 2022.
However, the US Federal Reserve promised at its meeting on December 13: Cut interest rates three times in 2024. Rates currently stand at 5.25% and reductions are possible as long as inflation is kept under control.
Fed Chairman Jerome Powell will report on the monetary policy of the organization he leads before Congress this Wednesday (16.00) and before the Senate on Thursday (16.00 Thursday). “If (…) Powell thinks that inflation is showing a positive development and the market is satisfied with its pricing, the first interest rate cut can be made in June, the recent upward dynamic may be prolonged. In this case, the paradox is that Cyclical assets like equity markets and safe-haven assets (gold and bitcoin) are advancing “and tried to break free at the same time,” explains CMC Markets analyst Luis Francisco Ruiz.
On the other hand, if the market comments that Jerome Powell is not satisfied with the current situation and that interest rate cuts may be postponed, this will mean a correction in the stock markets and a relaxation of the interest rate increase. The futures market is at 68.6 percent discounting that the Fed will cut interest rates by 25 basis points on June 12.
The predictable decline in the cost of money in the US and Europe is also boosting stocks and particularly growth-linked assets. Nasdaq Composite technology index hits all-time high Last Friday was the last of the major stock market indices to reach record highs this year.
The big push into ETFs
The recent increases come amid massive capital inflows into new exchange-traded funds (ETFs), which the US stock market regulator SEC approved this January. For example, BlackRock’s exchange-traded fund iShares Bitcoin Trust (IBIT) surpassed $10 billion in assets under management last week.
“With the birth of these nine ETFs, big moves are happening on weekdays rather than weekends,” says Antoni Trenchev, co-founder of cryptocurrency exchange Nexo. “What we saw today may be a repeat of what happened at the beginning of last week. Bitcoin rose $10,000 in a few days. “We are in the kind of environment where a day or two of sideways consolidation could precede explosive price movements because of the insatiable demand for these new spot ETFs,” he emphasizes.
Retail shareholders are coming back
Retail shareholders, dubbed ‘crypto brothers’ on social networks, are back. Bitcoin’s rise is also boosting other cryptocurrencies, especially those within the year. Analysts say these gains are evidence that retail investors, who were absent for much of the recent rally, are starting to return to the market.
Related news
Ethereum, the second cryptocurrency by capitalization, is up 59% on the year, Solana is up 27%, and Cardano is up 20%.
Reducing Bitcoin emissions
Bitcoin experts also attribute the increases to the following: The fourth ‘halving’ will occur between March and June 2024Because this represents the decrease in rewards Bitcoin miners receive every four years. Three ‘halvings’ in history have reached all-time highs within 12 months, so many investors believe history will repeat itself. These halvings will continue until no new bitcoins are produced and the cryptocurrency reaches the final supply of 21 million tokens. There are currently around 19.5 million in circulation.