Bitcoin, the most well-known and traded cryptocurrency worldwide, rises by 5% on Thursday to around 67,255 dollars. This move aims to push back toward the all-time highs hit last week when it reached 73,137.50 dollars. So far this year, Bitcoin has climbed about 59.95%, and in the last twelve months, around 136%.
During the past week, Bitcoin touched several new highs. On Wednesday it peaked at an all-time high of 73,137.50 dollars, and on Tuesday it briefly reached 72,968 dollars. From its highest levels ever, it has pulled back about 8%.
Bitcoin has been the standout asset in the last twelve months, driven by expectations that the U.S. Federal Reserve will cut interest rates by about 0.75% this year. In 2023, the major cryptocurrency finished with a year-over-year gain of roughly 108%.
In euros, the popular digital currency is also trading at historical highs, around 61,720 euros, with a year-to-date gain near 62% and a twelve-month gain around 136%.
The recent gains come as big inflows into new exchange-traded funds (ETFs) emerge, with the U.S. Securities and Exchange Commission approving these products earlier in January.
“We could see genuine price explosions to the upside, accompanied by volatility, since some investors will secure profits,” said Javier Pastor, head of Institutional Training at Bit2Me. Pastor notes that Bitcoin will be in demand not just from large investment funds, but also from pension funds and sovereign wealth funds.
Analysts say these gains reflect retail investors, who had largely been absent during the recent rally, beginning to re-enter the market. Bitcoin’s current market capitalization sits around 1.25 trillion dollars, with about 61 million dollars traded in the last 24 hours, compared to the typical 20 million for the year so far.
Bitcoin’s momentum and macro factors
The recent price moves come amid a period of strong capital inflows into newly launched ETFs, which gained regulatory approval from the U.S. SEC earlier this year. Market observers note that significant demand from institutional and non-traditional buyers could sustain higher prices, even in the face of short-term volatility.
Experts attribute the rally to expectations of continued monetary easing signals from major central banks and the allure of Bitcoin as a potential hedge against traditional financial market risk. The halving cycle, expected to occur between March and June 2024, is also cited as a driver, since each prior halving has historically coincided with price surges over the following 12 months. The halving gradually reduces the reward for miners until the total supply cap of 21 million tokens is reached and currently, about 19.5 million coins are in circulation.
Despite the optimism, central banks remain skeptical. The European Central Bank recently published a report criticizing Bitcoin, arguing it has not fulfilled its promise as a decentralized global digital currency for legitimate transfers, and claiming its value remains effectively zero. This skepticism underscores ongoing regulatory uncertainty that could influence prices and adoption in the near term.