Bitcoin has surged to a fresh all-time peak, marking its first such milestone in over two years. The current rally, driven by enthusiasm surrounding bitcoin exchange-traded funds and the impending halving event, has gained momentum.
The cryptocurrency surged to a peak of $69,210 on Tuesday morning before retracting, according to Coin Metrics. It was recently traded 4% lower at $64,665.68. The leading crypto achieved its previous high of $68,982.20 on Nov. 10, 2021, approximately a year before FTX’s catastrophic failure, which some liken to crypto’s Lehman Brothers moment.
“Bitcoin reaffirming its all-time peak once more underscores its enduring presence,” remarked Alex Thorn, Galaxy Digital’s head of research. “Throughout its 15-year history, bitcoin has weathered four 75% or greater declines, yet each time, it has made a powerful comeback.”
Clara Medalie, research director at Kaiko, echoed this sentiment, describing a new record as “a significant psychological milestone” that “illustrates crypto’s remarkable resilience in the face of major challenges.” Nonetheless, she noted that it “doesn’t significantly impact the industry’s innovation pace.”
“Bitcoin’s increasing value enhances its utility,” Thorn emphasized. “With higher market caps and daily turnover, it can accommodate larger investments. Bitcoin’s volatility has consistently declined over time, allowing for more substantial investment positions.”
Since the start of February, investors have closely monitored various factors driving the surge in Bitcoin’s price. This surge has been attributed to several catalysts, including the introduction of U.S. spot Bitcoin ETFs earlier this year and the imminent “halving” event scheduled for late April, which aims to create scarcity around the asset. The upward momentum of the flagship cryptocurrency has notably accelerated this week.
This new record signifies a significant milestone for an industry that previously grappled with reputational and regulatory risks, particularly evident two years ago when bankruptcies among crypto lenders and the collapse of exchanges like FTX shook investor confidence. By the end of 2022, amidst concerns about the potential contagion from the FTX collapse, Bitcoin hit a two-year low, experiencing a 64% decline over the year. Since then, it has been striving to assert its legitimacy.
Despite persistent skepticism from critics who dismiss Bitcoin as a “bubble” akin to the tulip mania of the 1600s in Holland, the ongoing surge underscores the demand for a decentralized, programmable, and scarce digital currency.
Furthermore, this milestone may herald a resurgence of retail investor interest in the crypto market, according to Needham analyst John Todaro. Retail interest often follows momentum, and reaching all-time high levels could stimulate further investment. Paradoxically, this surge could divert more capital flows into alternative coins perceived as relatively cheaper.
The crypto market, spearheaded by Bitcoin, demonstrated robust recovery in 2023, driven partly by the U.S. regional banking crisis and speculation surrounding the approval of Bitcoin ETFs by the U.S. Securities and Exchange Commission. Despite lingering skepticism about the valuation and intrinsic value of cryptocurrencies, the introduction of U.S. spot Bitcoin ETFs has bolstered legitimacy, with BlackRock’s iShares Bitcoin Trust (IBIT) surpassing $10 billion in assets under management last week.
With Bitcoin experiencing a strong uptrend, investors entering the market should exercise caution as unrealized profit margins reach significant levels.
Ed Tolson, CEO and founder of the crypto hedge fund Kbit, warned, “The market is poised for a notable correction, possibly ranging between 10% and 20%.” He emphasized the risk of cascading liquidations in the crypto perpetual swap markets, where retail investors have heavily invested in leveraged long positions amid high funding rates. Despite expectations of Bitcoin performing well over the next few quarters, Tolson anticipates sharp corrections along the way.
Owen Lau from Oppenheimer echoed similar sentiments, stating, “The rapid rise raises concerns about a correction.” Nonetheless, he highlighted the presence of long-term catalysts supporting positive price action.
Read More: Bitcoin nears its 2021 all-time high, surpassing $67,000
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