Bitcoin
and other cryptocurrencies rose Wednesday, with the largest digital asset bouncing back to near its record high, which was reached on Tuesday before a wave of profit-taking. Analysts remained bullish that more gains could come for cryptos.
The price of Bitcoin has risen 1% over the past 24 hours to above $67,500, closing in on peak levels above $69,000 reached on Tuesday, which marked the first fresh record h for the biggest crypto since November 2021. After notching its record, Bitcoin tumbled amid profit-taking, briefly slipping below the key $60,000 level before paring losses into Wednesday.
Bitcoin has climbed more than 50% since the start of the year, with gains driven in large part by U.S. approval in January of spot Bitcoin exchange-traded funds (ETFs). Crypto bulls have hoped that these funds would usher in a fresh wave of investor interest in tokens—and, so far, that narrative has been borne out, with significant inflows into these ETFs, which buy Bitcoin itself and can significantly impact prices.
“There’s clearly a demand shock that’s being driven in part by these newly launched Bitcoin ETFs,” said Zachary Townsend, CEO of crypto-focused insurer Meanwhile. “These ETFs have had to acquire roughly 2,800 Bitcoin with each day of trading even as the network produces only 900 Bitcoin per day. In short, the demand is significant and relatively sustained.”
Improved risk sentiment and general jubilation in wider markets also has helped, with the
S&P 500
and
Nasdaq
stock indexes—with which Bitcoin has often been correlated—also around record levels. All of these factors, combined with a strong technical market backdrop, have analysts calling for Bitcoin to climb even higher. In a market often defined by fear-of-missing-out, or FOMO, dynamics, there is the chance that prices could spiral higher as more and more traders pile in.
“Bitcoin’s price often reaches new highs that are not just small bumps, but large leaps beyond the previous records,” said Sergey Nazarov, co-founder of blockchain network Chainlink. “This suggests that we may be at the beginning of a new positive market cycle for Bitcoin. When Bitcoin’s price surges, it attracts more capital to the ecosystem.”
Beyond Bitcoin,
Ether
—the second-largest crypto—rose 4% to near $3,900, still well short of its all-time high near $4,400. Smaller tokens or altcoins were weaker, with
Cardano
down 4% and
Polygon
plunging 6%. Memecoins also slid lower after a significant outperformance on Tuesday, with
Dogecoin
dropping 6% and
Shiba Inu
shedding 8%.
“One indication that the Bitcoin rally is being driven by ‘smart money’ is that smaller coins are nowhere close to their own record highs,” said Marios Hadjikyriacos, an analyst at broker XM.
Write to Jack Denton at jack.denton@barrons.com
Read the full article here
Discussion about this post