Bitcoin Skyrockets to $68,000, Hits Two-Year Peak: A 50% Gain in 2024

Bitcoin, the world’s most popular cryptocurrency, vaulted past $68,000 on Tuesday, nearing its all-time high as investors piled back into digital assets, betting that the recent launch of bitcoin exchange-traded funds would draw even more mainstream money.

The latest rally has erased much of bitcoin’s slump from 2022, when it lost about 60 percent of its value amid a broader tech stock sell-off and the collapse of major crypto projects like Terra/Luna. With the crypto winter seemingly over, investors are again enthralled by bitcoin’s potential as the battle-tested original cryptocurrency.

“The appetite to gain exposure to bitcoin is reaching insatiable levels,” said Tony Sycamore, a market analyst at the online trading platform IG. “While bitcoin is overbought in the short term, the move is far from done, and dips will be well supported with a move toward $80,000 not out of the question.”

Bitcoin briefly traded as high as $68,828 on Tuesday, approaching its record of just under $69,000 set in November 2021. As of Tuesday evening, it was changing hands around $68,500, up roughly 50 percent for the year.

The latest run-up began in earnest in late February, around the time that the first U.S.-listed bitcoin exchange-traded fund began trading. The BlackRock Bitcoin Trust (ticker symbol: BTCCT) quickly attracted over $1 billion in assets, underscoring investor demand for ways to gain exposure to bitcoin through regulated, traditional investment vehicles.

Data from the analytics firm LSEG showed that net inflows into the 10 largest U.S. bitcoin funds hit $2.17 billion in the week through March 1, with more than half of that going into BlackRock’s fund.

It’s crypto mania 4.0, and I think if we continue to see fairly low bond and rate volatility, it could keep going,” Kyle Rodda, a senior markets analyst at Capital.com, said of the bitcoin surge. “There’s definitely something of an irrational exuberance creeping into the market.”

The crypto industry welcomed the launch of spot bitcoin ETFs as a landmark moment that could usher in a new era of mainstream adoption. For years, regulators had approved only bitcoin futures funds, which trade contracts rather than holding the actual cryptocurrency. The spot ETFs, which own bitcoin directly, are seen as a more straightforward and accessible investment.

The rally in bitcoin has coincided with relative calm across global financial markets in 2024. The CME Group’s CBOE Volatility Index, known as the VIX and used to measure turbulence in U.S. stocks, hovered around 16 on Tuesday, well below its long-term average of around 20. Market volatility can dent appetite for riskier assets like cryptocurrencies.

Crypto proponents have long touted bitcoin as a hedge against inflation and a safe haven amid geopolitical turmoil. But the cryptocurrency has increasingly traded in line with tech stocks, suggesting it is seen by many investors simply as a speculative asset.

While the new bitcoin ETFs may be fueling the current price surge, they’re unlikely to be solely responsible for bitcoin’s ascent toward a $1 trillion market value. In addition to expectations around greater institutional adoption, the cryptocurrency’s next “halving” — an event that occurs roughly every four years and cuts bitcoin’s supply in half — may also be playing a role. Bitcoin’s previous halvings in 2012 and 2016 preceded major price rallies.

Of course, bitcoin has a long history of wild price swings and speculative frenzies, prompting critics to dismiss it as a risky gamble rather than a legitimate investment. Its previous record high in November 2021 was followed by a precipitous crash as the Federal Reserve began raising interest rates to combat high inflation.

Cryptocurrencies also remain largely unregulated, making the market vulnerable to market manipulation, hacks and other nefarious activities. In recent months, the Securities and Exchange Commission has ramped up its scrutiny of the crypto world, most notably by suing the founders of Terraform Labs for fraud related to the $40 billion collapse of the TerraUSD stablecoin and Luna token last May.

Still, bitcoin’s believers remain steadfast. Ether, the second-largest cryptocurrency, has also seen big gains in 2024, rising about 50 percent to around $3,650 amid hopes that U.S. regulators could soon greenlight an ether-based ETF.

Tether, a so-called stablecoin that aims to maintain parity with the U.S. dollar, announced this week that its total issuance surpassed $100 billion, underscoring the rapid growth of digital assets.

Whether this bitcoin rally has more room to run or will be followed by another crash remains to be seen. But for now, the crypto market has recaptured its frenzied feel not seen since the peak of the COVID meme-stock craze.

“This seems to be yet another bitcoin mania,” Mr. Rodda of Capital.com said, “though whether it ends up being another painful bust is anyone’s guess.”

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