Bitcoin price is being bolstered by a steady inflow of institutional money catalysed by the success of US exchange-traded funds (ETFs) linked to the leading cryptocurrency.
Rising 1% to US$48,436 ($74,233) in Monday's Singapore morning trading, Bitcoin witnessed a seventh consecutive daily surge, marking its lengthiest rally since January 2023, according to Bloomberg data.
The broader cryptocurrency market also ascended, with smaller tokens like ether, solana, and cardano making notable gains. Bitcoin has surged more than 12% year-to-date, surpassing the performance of even the renowned "magnificent seven" mega-cap tech stocks.
Since January 11, nine new spot bitcoin funds commenced trading in the US, attracting over US$9 billion in investor inflows. Notably, offerings from BlackRock (NYSE:BLK) and Fidelity Investments emerged as the most successful ETF launches in terms of post-launch asset accumulation, according to Bloomberg Intelligence analysts Eric Balchunas and James Seyffart.
Shifting market dynamics
Caroline Bowler, CEO of crypto platform BTC Markets, highlighted an "increasing movement of institutional money into the asset class," indicative of shifting market dynamics.
Moreover, the anticipation surrounding the upcoming quadrennial bitcoin halving in April is amplifying optimism across the crypto sphere. The event, which reduces the bitcoin reward for miners, historically augurs well for prices.
DBS Bank's chief economist Taimur Baig underscored the historical correlation between halving events and bullish price trajectories, noting the economic rationale behind price appreciation amidst diminishing mining rewards.
While Bitcoin's resurgence is buoyed by ETF inflows, positive sentiment typically pervades during the Lunar New Year holidays in Asia, as highlighted by Fundstrat Global Advisors.
Despite the recent upsurge, Bitcoin still lingers about US$20,000 below its 2021 record high, attained amid a pandemic-induced bull market fuelled by accommodative monetary policies.