© Reuters. FILE PHOTO: FILE PHOTO: In this illustration taken on October 24, 2023, physical representations of the cryptocurrency bitcoin are seen. REUTERS/Dado Ruvic/Illustration/File photo
By Amanda Cooper and Alun John
LONDON (Reuters) – Bitcoin rose 5% on Friday to a one-month high, boosted by what analysts said was a wave of buying ahead of the April halving event and as recent outflows from exchange-traded funds on the stock market they slowed down.
The price rose to a session high of $47,705, the highest since January, after the first US-listed spot bitcoin exchange-traded products received regulatory approval.
The world's largest cryptocurrency was last up 3.5% at $46,946, up 10% this week, its biggest one-week gain since October. Ether rose 2.5% to $2,486.
It hit a two-year high just above $49,000 in January, but has since trended lower, under pressure from a wave of “selling the news” profit-taking after the Securities and Exchange Commission finally approved ETFs.
Bitcoin's decline went against the grain of other financial markets in recent weeks, as stocks, bonds and gold rallied on expectations that global central banks would move to cut interest rates this spring.
Policymakers have since opposed this and economic data has not supported the view that rates should fall any time soon, but risk assets like stocks have risen, and bitcoin has resumed its march. upwards.
Friday's price jump was said to be a function of a slowdown in recent ETF outflows and a burst of buying ahead of the April halving, analysts said.
“With bitcoin rallying back to $46,000 this morning, traders are clearly preparing for the long-awaited halving event coming in about two months,” said Scope Markets chief market analyst Joshua Mahony. .
The next halving is expected in April, a process designed to slow the release of bitcoin, whose supply is limited to 21 million – of which 19 million have already been mined – by halving the reward for producing the tokens.
“If historical trends continue to hold, traders will expect to see an excellent 2024 given the previous pattern of post-halving outperformance,” Mahony said.
Bitcoin prices have typically recovered after halvings. Six months after the first halving in 2012, the price jumped from $12 to $126. After the second halving in 2016, it went from $654 to $1,000 in seven months and in 2020 it skyrocketed to $18,040 from $8,570 in the same period.
Additionally, according to Markus Thielen, founder of digital asset research firm 10x Research, bitcoin also tends to do well during US election years, coinciding with the halving cycles in 2012, 2016 and 2020. .
QCP Capital said in a note on Thursday that some ETF outflows had slowed, particularly from the Grayscale Bitcoin ETF, the largest by assets, which supports cryptocurrency spot prices.
“Total inflows into all BTC ETFs are now positive,” QCP said.
When the SEC approved the ETF's listing in January, Grayscale, whose existing bitcoin trust was converted into an ETF at the time, shed $2.7 billion in outflows the first week after, as early investors rushed to book profits, according to data from LSEG Lipper.
Outflows slowed in the following week to $1.5 billion, and had fallen to $701 million in the week ending February 7.
Scope Markets' Mahony noted that the recent rise in the dollar has acted as a drag on cryptocurrencies lately, but the effect is likely to wane.
