In a significant milestone for the cryptocurrency market, the total investment in Bitcoin surged past the $1 trillion mark on Wednesday, the first time since November 2021. This surge was fuelled by continuous inflows into US spot Bitcoin exchange-traded funds (ETFs), which provided crucial support to Bitcoin prices.
On Wednesday, Bitcoin’s value soared to $51,606, marking a 25-month high with a 4.1 percent increase. This surge propelled Bitcoin’s market capitalization to $1.005 trillion, according to data from Coingecko.
However, it’s worth noting that the all-time high for Bitcoin’s market cap was $1.28 trillion, reached in November 2021.
Since the beginning of February, Bitcoin has witnessed a remarkable uptick of around 20 percent, poised to record its most significant monthly rise since October. Notably, Bitcoin investments constitute over half the $2.01 trillion invested in the overall cryptocurrency market, encompassing other digital assets like Ether.
Analysts attribute much of the recent price action to solid inflows into newly listed US ETFs. Data from LSEG Lipper indicates that capital flows into 11 US spots. Bitcoin ETFs surged to $1.64 billion in the week leading up to Wednesday.
Over the past five trading sessions alone, these products attracted $409 million in inflows following their regulatory approval and subsequent trading launch in January.
Analysts from B2C2, a crypto liquidity provider, highlighted the correlation between price movements and capital flows in the cryptocurrency market. They anticipate that substantial inflows will likely drive further price appreciation for spot Bitcoin if the current pace continues.
In tandem with Bitcoin’s rally, shares of US-listed cryptocurrency firms experienced pre-market gains on Wednesday. Notable mentions include Coinbase, which saw a 7 percent increase, while mining companies like Riot Platforms and CleanSpark surged nearly 9 percent and 16 percent, respectively.
Bitcoin’s journey has been tumultuous, with its all-time high of $69,000 achieved in November 2021, followed by a struggle throughout 2022 and early 2023. Factors such as global central banks’ monetary tightening and notable failures within the crypto industry, including those at leading exchanges like FTX, contributed to this turbulence.
However, recent months have seen renewed optimism fueled by hopes of a soft economic landing and the introduction of spot Bitcoin ETFs. These ETFs are hailed as game-changers for the industry, offering investors exposure to Bitcoin without the need to hold the asset directly.
Ether, the second-largest cryptocurrency by market capitalization, also experienced a surge, reaching $2,742, its highest level since May 2022. This upward momentum underscores the broader bullish sentiment within the cryptocurrency market, driven by Bitcoin’s resurgence and favorable market conditions.
