Bitcoin's price surpassed the $65,000 mark on Monday amid increased demand ahead of a new halving (a reduction to half of the reward for mined blocks), and a significant influx of purchases by companies issuing spot Bitcoin ETFs, BlackRock and Fidelity Investments among them.
The largest cryptocurrency in the ecosystem briefly touched $66,387.95 on Monday morning, placing the digital asset less than $3,000 away from its all-time high from November 6, 2021, when it traded at $68,991.
The surge comes at a very different moment for the ecosystem, given the strong influx of institutional capital, especially through Bitcoin spot Exchange-Traded Funds (ETFs), which were approved in January by the Securities and Exchange Commission (SEC) and made it easier for retail investors to purchase the digital asset.
Javier Pastor, director of institutional training at the Bit2Me platform, told Spanish news agency EFE that, as of March 1st, these funds have acquired 76,951 bitcoins throughout 37 trading sessions, a figure that translates to 4,068 bitcoins per day. At current prices this amounts to a daily inflow of $250 million.
This inflows have significantly surpassed the supply of new Bitcoins produced by miners. Matt Hougan, Chief Information Officer at Bitwise, published a graph on his X showing that during the week from Feb. 24 through Mar 1, 30,029 Bitcoins were purchased by ETF funds, compared to 6,160 new bitcoins produced by miners.
Here's the weekly summary (Feb. 24 - March 1, h/t @HODL15Capital).
— Matt Hougan (@Matt_Hougan) March 2, 2024
Keep it simple: There is more demand than new supply. pic.twitter.com/ighWC0hOOi
This gap could peak after the halving, a scheduled event that is going to halve the reward in Bitcoins miners receive for each completed block.
The block reward started at 50 BTC in 2009, then decreased to 25 in 2012, further halved to 12.5 in 2016 and reached the current reward of 6.25 BTC in 2020, according to an article by specialized outlet Cointelegraph. The upcoming halving event is anticipated to take place in April 2024, reducing the block reward to 3.125 BTC.
Historically, halving events have aligned with substantial increases Bitcoin prices and the broader cryptocurrency markets. However, the new circumstances of institutional inflows taking center stage in the ecosystem could trigger an even more pronounced rally.
The major players in Bitcoin Spot ETFs in recent months have been BlackRock Inc's iShares Bitcoin Trust (IBIT) and Fidelity Investments' Wise Origin Bitcoin Fund (FBTC), as reported by Coingape. According to the outlet, they have "outperformed their counterparts in the spot Bitcoin ETF market," collectively grabbing 79% of the entire inflow registered in the spot Bitcoin ETF ecosystem since inception.
Out of the nine ETFs approved, BlackRock's IBIT alone has attracted inflows totaling approximately $7.8 billion, closely followed by FBTC from Fidelity with $4.8 billion in inflows, Coingape informed. And added the remaining seven spot ETF issuers, part of the "Newborn Nine" as they are referred to, have collectively registered only $3.4 billion, which is less than 50% of BlackRock's inflows.
In Latin America, the rise in price and market confidence in Bitcoin as a valuable asset is generating expectations. In recent weeks, while El Salvador's president, Nayib Bukele, celebrated the breakthrough above $60,000, confirming once again that the country will not sell its Bitcoins, Bitcoin ETFs landed in Brazil and Peru.
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