Bitcoin hits $80k as rally snowballs

LONDON — Bitcoin hit US$60,000 (S$80,658) on Wednesday (Feb 28) for the first time in more than two years, as a surge of capital into new US spot bitcoin exchange-traded products fuelled a rally that has reached 42 per cent this month, on track for its largest monthly gain since December 2020.

Bitcoin was last up eight per cent at US$61,272, its highest since November 2021, when it hit a record just below US$70,000. It was also heading for its largest weekly gain in a year, up 18.5 per cent since Feb 21.

Traders have poured into bitcoin ahead of April's halving event — a process designed to slow the release of the cryptocurrency. In addition, the prospect of the Federal Reserve delivering a series of rate cuts this year has fed investor appetite for higher-yielding or more volatile assets.

"Bitcoin is being driven by the support of consistent inflows into the new spot ETFs and outlook for April's halving event and June's Fed interest rate cuts," said Ben Laidler, global markets strategist at retail investment platform eToro.

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The value of all the bitcoin in circulation has topped US$2 trillion this month for the first time in two years, according to crypto platform CoinGecko, while the price of the token itself has doubled in just four months.

The bigger bitcoin exchange-traded funds (ETFs) have seen a definite pickup in interest this week.

The three most popular, run by Grayscale , Fidelity and BlackRock have seen trading volumes surge.

On Monday and Tuesday, around 110 million shares in the biggest three changed hands, about 51 per cent of the 215 million shares traded in the market's most valuable companies — Apple, Microsoft and Nvidia, according to LSEG data.

Three weeks ago, this percentage was closer to 15 per cent.

"Essentially, we're seeing the ETF effect ahead of schedule... We think it's reflective of advisors getting out there very quickly to start selling the ETFs to clients," said Joseph Edwards, head of research at Enigma Securities.

LSEG data showed flows into the 10 largest spot bitcoin ETFs brought in US$420 million on Tuesday alone, the most in almost two weeks.

"If US$60,000 doesn't whet the appetite, consider that 70 per cent of bitcoin supply has remained unmoved for a year, and the little that's left is being hoovered up by the likes of BlackRock and Fidelity, just as rewards for miners are about to be slashed in half," said the cofounder of the Nexo crypto exchange, Antoni Trenchev.

Crypto investor and software firm MicroStrategy this week disclosed it had recently bought about 3,000 bitcoin for US$155 million, while social media platform Reddit said it had bought small amounts of bitcoin and ether.

Meanwhile, the world's second biggest crypto currency, ether, which underpins the ethereum blockchain network, rose 3.2 per cent to US$3,353, having hit another two-year high earlier in the day. Its price has risen 47 per cent in February.

Some investors are hoping US regulators will approve applications for ETFs based on spot ether.

Enigma Securities' Edwards said the rise felt reasonably well supported.

"There certainly isn't a manic feeling to who's buying and why — ether gaining against the field also speaks to a more measured environment — but there's at least a little FOMO (fear of missing out) going on right now."

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