Bitcoin Hits New Milestone: Surges Beyond $60,000

The Biggest cryptocurrency, Bitcoin, has already increased by more than 45% this year.

For the first time in over two years, Bitcoin surged above $60,000 as investors became increasingly hopeful that the token's appeal extends beyond ardent digital asset aficionados.

Driven in part by the US exchange-traded funds' triumphant debut, which drew over $6 billion in interest since the coins' January 11 trading debut. November 2021 saw the last trade of Bitcoin, which earlier that month had hit an all-time high of about $69,000.

Ryan Kim, head of futures at digital asset prime brokerage FalconX, described it as "pretty nuts." The Big Take podcast is available on iHeart, Bloomberg Terminal, Apple Podcasts, and Spotify. Go over the transcript. The halving, or planned slowdown in the increase of Bitcoin's supply, is contributing to the upbeat attitude. 

In addition to fueling speculative interest in smaller tokens like Ether and Dogecoin, that has assisted in prolonging a protracted surge. Split Capital's founder, Zaheer Ebtikar, stated, "We are starting to see a pretty clear FOMO kind of rally." "More and more individuals are just persuaded to purchase."

Bitcoin is expected to see its largest monthly gain since December 2020, when it surged 50% to almost $9,600, thanks to the strong increase. After a slew of scandals and bankruptcies in the cryptocurrency sector that cast doubt on the sustainability of digital assets, Bitcoin has more than quadrupled in value since the beginning of the year, recovering from a 64% decline in 2022.

The biggest intraday rise since October 24 occurred on Wednesday when the digital asset increased by as much as 10% to $62,539. Even if investors have lowered their expectations for a softer monetary policy this year, as seen by an increase in US Treasury yields, digital tokens are surging. In 2024, bitcoin has beaten conventional assets like equities and gold.

Michael Safai, co-founder of quantitative trading company Dexterity Capital, stated, "This reversal is all the more impressive in light of central banks signaling they intend to keep rates high a while longer, eroding the theory that the next crypto bull would be driven by dropping interest rates."

Some industry observers have warned of an impending supply squeeze due to the enormous inflows into Bitcoin ETFs, as miners are unable to keep up with the demand for new coins. 

According to economists, almost 80% of Bitcoin's supply hasn't changed hands in the last six months, which might intensify the supply shortage and increase price pressure.

More than 300,000 Bitcoin are held by the nine new spot ETFs, which is seven times the total number of fresh coins generated since January 11.

Following the anticipated halving in late April, the daily production of new coins will decrease to 450 from 900. Supporters believe that there is still possibility for price growth if demand remains high and the quantity of new coins is halved.

Dan Slavin stated "There is an imbalance in supply and demand as a result of all of this,"  the creator of the cryptocurrency hedge fund Chainview Capital. "Price higher means more demand than supply, and with BTC price volatility, price higher doesn't mean 10%, it means much more."

Some commentators have cautioned that investors may become vulnerable to the boom and bust cycles that have come to symbolize the cryptocurrency industry due to the extreme nature of the surge.

According to Jaime Baeza, founder of cryptocurrency hedge fund AnB Investments, "this move has been very sharp, leverage is very high at the moment, as implied by derivatives basis and funding rates, so I would not be surprised by a sharp correction" of 20% or more. "However, if this rally keeps going at this rate, I would not be shorting it."