$69,000 mark ripped
Bitcoin reaches new all-time high
March 5, 2024, 4:53 p.m
Several factors are boosting the price of the digital currency Bitcoin: The highest-selling cyber currency is breaking the $69,000 mark for the first time in its history. The background to the current rally is not only the high demand for listed Bitcoin spot ETFs in the USA.
The price of the digital currency Bitcoin has reached a new all-time high. In the afternoon, the oldest and most important cryptocurrency exceeded its previous record of almost $69,000 from November 10, 2021, according to data from the analysis site Coinmarketcap.
Bitcoin’s rally began last fall. Since the beginning of the year alone, digital money has increased by around 50 percent against the US dollar. However, with the new all-time high, there is no guarantee that the Bitcoin price will continue to rise in the future. After the high on November 10, 2021, the price of Bitcoin crashed to below $17,000 within a year.
According to industry insiders, the situation on the crypto market is not comparable to the situation in autumn 2021. At that time, there was an overheating of the market due to hype among private investors, said Eric Demuth, founder of the Austrian crypto trading platform Bitpanda. There is now a stable legal framework provided by market supervision, so that many institutional investors and banks have entered the crypto market. “They have moved the price up in the last few months because a lot of new money has flowed into the market.” Private investors have so far had little involvement in the current upswing.
Among the major investors, financial institutions such as Grayscale, BlackRock and Fidelity, which have launched Bitcoin funds in the USA, stand out. These Bitcoin ETFs were approved by the US Securities and Exchange Commission in January. They allow investors to invest in Bitcoin without having to directly purchase or hold the digital currency itself.
According to calculations by James Butterfill, head of research at Coinshares, Bitcoin demand far exceeds the amount of new coins being created. The average number of Bitcoins demanded by the ETFs every day alone is around 4,000. “But only 900 Bitcoins are produced new every day.” The ETF issuers could not rely on the “miners” to supply them with Bitcoin. “You have to buy more on the market. And that drives up prices.” But Butterfill also blames the financial policy framework for Bitcoin’s rally. When central bank interest rates are high, there are a number of alternatives for investors. “Bitcoin looks less attractive in this case.”
An event that is expected for April 20th is also likely to play a role in the price development: the next so-called halving. The reward that Bitcoin miners receive for verifying crypto transactions is halved. Ultimately, the process leads to a slower growing supply of Bitcoin, which has usually resulted in rising prices in the history of Bitcoin.