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The price of Bitcoin (BTC) rose above the $US69,000 watermark this week, marking a new all-time high in Australian dollars and falling just short of its previous all-time high in US dollar terms.Â
Australians must now pay over $100,000 for a single Bitcoin. This marks a gain of over and marking a gain of almost 350% since its bottom at the start of last year.
After almost reaching its previous peak, BTC fell back to $US60,000 almost immediately, showing that some investors were looking to take profits after the blistering run. It is yet to be seen whether it will push higher and enter undiscovered price territory.
The recent approval of spot Bitcoin exchange-traded funds (ETFs) in the United States, a milestone event with far-reaching implications, has played a crucial role in driving the price up. These ETFs have not only facilitated unprecedented daily inflows but also underscored Bitcoin’s growing legitimacy and appeal as an investment asset. With Bitcoin’s finite supply and the new demand from ETFs, the stage is now set for the digital asset space to take off in a way that has never been seen before.
Why Is Bitcoin Going Up Today?
So what’s going on? On Tuesday, March 5, BTC surged after the newly approved spot Bitcoin ETFs experienced record daily inflows and the amount of Bitcoin held on centralised exchanges fell to a new low. The demand for Bitcoin, largely driven by the new ETFs, is outstripping the supply of BTC available in the market, creating a situation where the price is surging to bring sellers into the market to meet demand.
This rise is an extension of the run that began in October last year when news regarding BlackRock’s plans for a BTC Exchange Traded Fund (ETF) pushed the price to new highs for 2023. In early January, 11 spot BTC ETFs where approved to trade in the US for the first time in history, marking a significant milestone for the crypto market and solidifying Bitcoin as a legitimate investment in the eyes of institutions.
The launch of the ETFs occurred shortly after the approval, and all 11 ETFs saw significant inflows of capital almost immediately, marking it as one of the most successful ETF launches in history, second only to gold. However, since their launch, the flows of capital in these ETFs have been on the rise and money has been flowing heavily out of gold funds, with analysts predicting the Bitcoin funds could surpass the total size of gold funds in less than two years at the current trajectory.
Crypto-related stocks have also shown some life, with Coinbase (COIN), Mara Digital (MARA)and Riot Platforms (RIOT) all putting in double to triple-digit returns since the ETFs were approved..Â
There are also pending applications for spot Ethereum ETFs by many of the same institutions that were successful in having Bitcoin ETFs approved. Crypto bulls view the recent approvals as an indication that approval for a spot Ethereum ETF is also imminent. Currently, just like for Bitcoin prior to January, all existing Ethereum ETFs in the US can only trade Ethereum futures.
Australians must now pay over $100,000 for a single Bitcoin. This marks a gain of over and marking a gain of almost 350% since its bottom at the start of last year
Futures are investment vehicles that derive their value from the anticipated future price of an asset, eliminating the need to physically hold the underlying asset. This characteristic means they do not generate any direct demand for the asset itself.
As is the case with Bitcoin, a spot Ethereum ETF would be a substantial development as the fund would need to back the shares with Ethereum holdings, requiring large amounts of ETH to be purchased off the open market. Crypto bulls are confident this would have a significant positive impact on the price of Ethereum, just like it has for Bitcoin.
Over the past 12 months, a number of institutional investors also entered the crypto fray in ways other than just via ETFs. Following BlackRock’s application, Deutsche Bank announced that it has applied for a licence to hold digital assets in custody in Germany. This institutional interest in cryptocurrencies is a signal of legitimisation for the space, which will inevitably attract investors who were previously dubious about the prospects of digital assets.
Is the Crypto Winter Over?
While the enthusiasm surrounding the approval of the BTC ETFs cannot be denied, it’s crucial to remember the crypto industry still faces headwinds from the SEC and similar regulatory bodies worldwide.Â
The digital currency landscape is still navigating an unclear regulatory environment, trying to establish a balance between innovation and consumer protection. Recent lawsuits by the SEC against major cryptocurrency exchanges, such as Binance and Coinbase, are a stark reminder of the sector’s regulatory challenges.
Moreover, the broader macroeconomic landscape cannot be ignored. Global markets are grappling with the dual challenges of high interest rates and persistent inflation. These factors are putting pressure on all asset classes, not just cryptocurrencies. The increasing cost of borrowing and the decreasing value of money can act as deterrents to new investors and could potentially impact the overall growth trajectory of the crypto market, as investors park their money in so-called ‘safe havens’.
Despite the promising signs and the growth of digital assets over the past few months, investors would be wise to stay up to date on the latest news to monitor the ever evolving investment landscape.
What Does Bitcoin’s Bounce Mean for Australian Investors?
Bitcoin’s recent increase in price is a positive sign for Australian crypto investors, signalling potential growth and resilience in the crypto market. This bounce reflects not just a recovery in cryptocurrency markets but also a growing acceptance and integration of digital assets into conventional financial systems. For Australians invested in or considering entry into the crypto space, this trend signifies a promising horizon.
The ripple effects of international acceptance, including the successful launch of Bitcoin ETFs, may encourage a more supportive and engaging approach from local financial institutions and regulatory bodies toward cryptocurrencies. Australian investors are operating in an evolving market, where the increased legitimacy and stability of digital currencies could lead to their inclusion as a part of a balanced investment portfolio, opening the doors to further investment from larger indexes and funds.Â
Further investment in this emerging asset class would compound the legitimacy effect, further enhancing market liquidity, and potentially, driving more favourable regulatory frameworks. As the global financial ecosystem gradually embraces cryptocurrencies, Australian investors may benefit from the broader acceptance of cryptocurrencies and the potential for substantial returns as the market matures.
Nevertheless, positive forecasts do not make cryptocurrencies any less risky or volatile. Be sure to do your own research on whether crypto is right for you, and don’t invest money you can’t afford to lose.
This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class. Cryptocurrency is unregulated in Australia and your capital is at risk. Trading in contracts for difference (CFDs) is riskier than conventional share trading, not suitable for the majority of investors, and includes the potential for partial or total loss of capital. You should always consider whether you can afford to lose your money before deciding to trade in CFDs or cryptocurrency, and seek advice from an authorised financial advisor.
Frequently Asked Questions (FAQs)
Why is Bitcoin up so much right now?
Bitcoin’s recent surge can be attributed to a combination of factors, with a notable influence stemming from the record inflows into newly approved spot Bitcoin exchange-traded funds (ETFs) and the decreasing amount of Bitcoin held on centralised exchanges, which are hitting new lows. The substantial demand for Bitcoin, spurred by the ETFs, is exceeding the available supply in the market, propelling the price upward as the market seeks equilibrium.
Additionally, the approval of spot Ethereum ETFs by institutions successful with Bitcoin ETFs adds to the positive market sentiment. The institutional interest, as evidenced by actions like Deutsche Bank’s application for a digital asset custody licence, further legitimises the cryptocurrency space, attracting both seasoned and new investors.
What's happening with Bitcoin today?
Today, Bitcoin is experiencing a surge in value thanks to factors such as strong flows of capital into the newly approved spot Bitcoin ETFs and also the number of coins available for purchase on the open market falling to a new low. The approval of these ETFs in the US have not only underscored Bitcoin’s legitimacy in the eyes of institutional investors but are also leading to new price dynamics as the flow of capital into these traditional investment vehicles is now causing a ripple effect in the crypto market.
What will Bitcoin be worth in 2025?
Predicting the exact value of Bitcoin in 2025 is challenging due to the dynamic and volatile nature of the crypto market. Various factors, including regulatory developments, technological advancements, market demand, and global economic conditions, will influence its value. The recent approval of the spot BTC ETFs in the US is a strong signal of legitimisation for the asset, and could drive price higher as more investors decide to allocate a percentage of their portfolio to digital assets moving forward.
Ultimately, no one really knows how much Bitcoin will be worth in the future. Crypto bulls believe it will be higher than it is today, while sceptics argue the opposite. Whatever you believe, be sure to do your research and consult with a financial advisor before making any investment decisions.
What is the price prediction for Bitcoin in February 2024?
The price prediction for Bitcoin in February 2024 will depend on numerous factors, such as regulatory changes, market trends, and investor sentiment. As we’re currently witnessing increased institutional interest despite regulatory headwinds, the market is cautiously optimistic. The recent court ruling in favour of Grayscale and the approval of spot BTC ETFs for trade in the US by major institutions like BlackRock are positive signs.
However, it’s always advisable to keep up with the latest developments in the crypto market and conduct thorough research before making investment decisions.
What is going on with crypto today?
As of February 27, 2024, the crypto market is seeing a surge to highs that haven’t been seen for over two years. The recent approval of Bitcoin ETFs has injected renewed enthusiasm into the market, influencing not just Bitcoin but also other cryptocurrencies.
Similar to Bitcoin’s situation last year, Ethereum also has pending spot ETF applications in the US. If approved, crypto bulls expect a similar outcome for Ethereum as has been seen with Bitcoin—price surging due to the demand from these new investment vehicles.
Why is Bitcoin going up this week?
Bitcoin’s price increase this week can be traced back to the ongoing positive impact of the spot Bitcoin ETF approvals, which have led to record inflows and a bullish sentiment among investors. The scarcity of Bitcoin, exacerbated by the decrease in available supply on exchanges and the influx of institutional capital, has contributed to its price rise. Investor optimism and broader market acceptance continue to fuel Bitcoin’s upward trajectory.
It is clear that institutional interest in digital assets is increasing, with giants like BlackRock, Ark, and Grayscale all now managing Bitcoin ETFs and also applying for spot Ethereum ETFs. However, it’s important to note that the cryptocurrency market still faces challenges, including regulatory headwinds and broader macroeconomic factors, such as the spectre of interest rate rises and high inflation.
Why is Bitcoin surging?
Bitcoin is surging due to a confluence of factors including the landmark approval of spot Bitcoin ETFs, which have seen significant capital inflows, decreasing Bitcoin availability on exchanges, and growing institutional interest. These elements have created a bullish market sentiment, underscoring the demand outstripping the available supply and propelling Bitcoin’s price upwards as the cryptocurrency cements its position in the mainstream financial landscape.
Is it wise to invest in Bitcoin?
Investing in Bitcoin involves high volatility and unpredictability, making it a potentially high-risk addition to your portfolio. Its value can rapidly change due to factors like market demand, regulatory shifts, and technological updates. While Bitcoin’s growing acceptance and limited supply can be attractive, its price is also susceptible to speculative trading, media reporting or other influences. Before investing, assess your risk tolerance and financial goals. Diversifying your investments rather than focusing solely on Bitcoin is generally advised. Stay updated on cryptocurrency trends and consider consulting a financial advisor for personalised guidance. As with all investments, there’s no guaranteed return, and it’s wise to invest only what you can afford to lose.
