Bitcoin has made impressive strides in the first few months of the year, with the leading cryptocurrency hitting a new all-time high of $69,000 in early March. This surge in value can be attributed to the recent approval of spot bitcoin ETFs in the U.S. and the highly anticipated bitcoin halving event slated for late April.
According to CoinMarketCap data, bitcoin has seen a 60% increase in value over the past month and a staggering 205% increase since the beginning of the year. This has also resulted in an overall 18% increase in the total cryptocurrency market cap, which currently stands at $2.55 trillion with bitcoin accounting for 52% of the total.
The timing of this new high aligns with the impending halving event, which occurs every four years. This event, also known as “the halvening,” leads to a decrease in bitcoin mining rates and ultimately controls the supply of the digital currency. Once the total supply hits 21 million, the process will come to an end, which is not expected to happen for another century.
Historically, bitcoin halvings have generated a surge in interest and demand for the asset, leading to a rise in value in the months following the event. This is due to the fact that demand typically outweighs the supply, further driving up the price.
The current price jump can also be attributed to the 11 spot bitcoin ETFs approved by the U.S. Securities and Exchange Commission in January. These ETFs have attracted institutional and retail investors, with many utilizing the services of financial advisors. This influx of new investors has resulted in a significant increase in institutional investments, which were previously on standby, waiting for an opportunity to enter the market.
Data from HODL 15 Capital shared by Bitwise Asset Management CIO Matt Hougan reveals that the number of bitcoins being purchased by ETFs has surpassed the number of new bitcoins being produced by miners.
The demand for these ETFs has far exceeded initial projections, with a total market cap of $53.74 billion according to Blockworks data. In the last 24 hours, trading volume has reached $1.81 billion.
