Bitcoin on Tuesday surged to a new all-time high of $69,202, surpassing its previous peak of $68,999.99 recorded in November 2021, Reuters reported. Despite reaching this historic high, the cryptocurrency experienced a dramatic reversal, subsequently falling by approximately 7% to around $63,400.
Meanwhile, the record rally was fueled by a robust influx of funds into U.S. spot exchange-traded funds (ETFs) for cryptocurrencies and the anticipation of interest rate cuts by the U.S. Federal Reserve this year.
The surge in Bitcoin’s value, which has reportedly soared nearly 160% since October—with 44% of that growth occurring in February alone—stands in stark contrast to the challenging conditions of 2022. Last year was marked by an extended “crypto winter,” characterized by a series of corporate bankruptcies and scandals that plagued the market.
However, investor enthusiasm has been off late spurred by the Securities and Exchange Commission’s approval of 11 spot bitcoin ETFs in late January, signaling increased institutional maturity and trust in the cryptocurrency market despite previous setbacks. These approvals pave the way for the first U.S.-listed ETFs that will track the price of Bitcoin, allowing both institutional and retail investors to gain exposure to the world’s largest cryptocurrency without the need to directly hold the digital asset.
Contributing to Bitcoin’s rise is the wider investment shift towards riskier assets, driven by the hopes of the Federal Reserve cutting U.S. interest rates. This has led to a broader enthusiasm for cryptocurrencies, tech stocks, and investment-grade corporate bonds. Additionally, anticipation surrounding April’s halving event, which reduces the rate at which new bitcoins are generated, has also played a role in driving up the cryptocurrency’s value.
However, the recent record rally quickly faced headwinds from potential profit-taking by earlier investors, the inherent volatility of the crypto market, and lingering concerns about its long-term stability.
Despite its volatility and the skepticism of some, Bitcoin continues to attract significant interest. This is evident from the substantial net flows into U.S. spot bitcoin funds that reached $2.2 billion in the week ending March 1, Reuters report, citing LSEG data, noted.
