© Reuters. FILE PHOTO: A bitcoin logo on a door in an illustration taken at La Maison du Bitcoin in Paris May 27, 2015. REUTERS/Benoit Tessier/File Photo
By Lisa Pauline Mattackal and Medha Singh
(Reuters) – is booming.
The world's largest cryptocurrency has jumped 22% this year to $52,005, surpassing a market value of $1 trillion for the first time since its record peak in late 2021.
Its resurgence has electrified the broader cryptocurrency market, including ether and other digital currencies, which has now surpassed $2 trillion, according to data from CoinGecko.
The sector has been bolstered by US regulatory approval of several spot bitcoin exchange-traded funds (ETFs), from BlackRock (NYSE 🙂 and Fidelity, among others), allowing access to the cryptocurrency compared to stock exchanges. regular.
U.S. spot ETFs added 60,000 bitcoins in the first month of their launch, more than doubling mining output in the same period, brokerage Bernstein said.
“The amount of flows far exceeds anyone's expectations,” said Mark Connors, head of research at Canada's 3iQ Corp.
Cryptocurrency trading volumes are also strong.
Total spot trading volumes on centralized exchanges rose 4.4% to $1.4 trillion in January, recording the fourth consecutive monthly increase and the highest reading since June 2022, according to a report by researcher CCData based in London.
The resurgence of interest helped the largest publicly traded crypto exchange, Coinbase (NASDAQ 🙂 Global, post its first quarterly profit in two years last week.
“Bitcoin appreciation is contributing to better bitcoin ETF spot flows, which in turn is lifting bitcoin prices and also driving up other tokens,” the JPMorgan analysts said.
$150,000 IN BITCOIN IN 2025?
Many industry observers say the outlook looks promising right now as investors buy bitcoin ahead of the blockchain's “halving,” a pre-planned process that cuts mining rewards in half every four years, scheduled for April.
Bernstein analyst Gautam Chhugani expects 2024 to be a watershed year for cryptocurrencies, with bitcoin hitting all-time highs followed by a peak of $150,000 in mid-2025.
“This optimistic outlook is reinforced by the expectation of an upcoming halving event and the possibility of interest rate reductions,” CCData analysts said.
While bitcoin is still 32% away from its all-time high of $69,000, last week it reached an all-time high against the Japanese yen of 7,919,000 yen.
BEWARE OF GREEDY CORRECTION
It's not all high-fives with cryptocurrencies: there are some signs that the market is being driven by FOMO-driven investors.
CoinGlass' Crypto Fear & Greed Index, a scale of 0 to 100 where zero denotes “extreme fear” and 100 indicates “extreme greed,” remained at 72. Typically, when investors become too greedy, it indicates that the market must undergo a correction.
Riskier assets, such as bitcoin, could be threatened by persistently high interest rates; Traders have pushed back bets on a rate cut from March to June following a string of strong U.S. economic data.
“While we remain optimistic with liquidity returning to risk assets, persistent inflation above 3% remains a downside risk and would also mean greater volatility in the markets,” said analysts at trading firm QCP Markets cryptocurrencies.
