Bitcoin made an impressive comeback on Monday, surpassing $50,000 for the first time since December 2021. This surge in value is largely attributed to the robust demand for recently launched spot bitcoin exchange-traded funds (ETFs).
According to CoinDesk data, the leading cryptocurrency, BTCUSD, has seen a 13% increase over the past seven days. Since the beginning of this year, it has climbed by 11%, adding to its already impressive 150% gain in 2023. However, it is worth noting that bitcoin is still down by approximately 28% from its all-time high of $68,990, which was reached in November 2021.
Industry experts believe that the recent rally is mainly driven by spot-market demand, leading to a significant spike in bitcoin’s trading volume. Sean Farrell, head of digital-asset strategy at Fundstrat, stated in a note on Monday that a considerable portion of this volume is likely entering the market through spot ETFs attracted by the positive weekend price movement.
While outflows from the Grayscale Bitcoin Trust (GBTC), which is the largest spot bitcoin ETF, have been slowing down, demand for other bitcoin ETFs remains strong. Mark Connors, head of research at digital-asset manager 3iQ, highlighted this trend.
In addition to the ETF-driven demand, some investors are turning to bitcoin as a potential safe haven during times of geopolitical uncertainty. Connors mentioned that with over 60 major elections worldwide expected in 2024 and an anticipated volatile geopolitical environment, capital is being allocated towards high-quality assets like bitcoin.
However, it is worth noting that bitcoin’s price remains highly volatile compared to traditional safe-haven assets like gold. Many experts are still skeptical and believe that there is insufficient evidence to consider bitcoin a reliable store of value.
Looking ahead, Connors predicts that bitcoin’s next level could range between $60,000 and $65,000. He maintains his long-term projection that the crypto will reach up to $160,000 by the end of 2024 and $350,000 by the second half of 2025.
Greg Magadini, director of derivatives at Amberdata, expects bitcoin’s market capitalization to surpass $1 trillion this week. As of Monday, the crypto’s market cap stood at around $977 billion, according to data from CoinMarketCap.