Bitcoin prices rallied today, climbing north of $48,000 as strong demand for bitcoin exchange-traded funds fueled compelling gains in the world’s most prominent digital currency.
The cryptocurrency reached roughly $48,060.00 this afternoon, CoinMarketCap figures show.
At this point, it had climbed more than 6% over the last 24 hours and was trading at its highest price in almost a month, additional Coinbase data reveals.
When explaining bitcoin’s latest gains, several analysts highlighted the substantial impact the recent approval of spot-based ETFs is having on digital currency markets.
Marc P. Bernegger, a serial entrepreneur who serves as the cofounder of crypto fund of funds AltAlpha Digital, summed the situation up nicely.
“The approval of Bitcoin ETFs is bringing new capital into the market with constant buying orders every day which increases the demand for Bitcoin significantly,” he stated, referring the U.S. Securities and Exchange Commission’s recent decision to “green light” several applications for spot-based bitcoin ETFs.
Joshua de Vos, Research Lead at CCData, also focused on this key development when offering his assessment of the digital currency markets.
“The prices of crypto assets have rebounded to range highs after the drawdown following the approval of spot Bitcoin ETFs,” he claimed.
“The softening of the outflows from the Grayscale Bitcoin Trust (GBTC) and the continuing strength of the spot ETFs, which have now reportedly accumulated over 200,000 BTC in less than a month, has shifted sentiment within the market,” the analyst claimed.
“With TradFi Indices continuing to make new all-time highs, Bitcoin is likely to see its strength continue after the idiosyncratic events earlier in the month,” he stated, offering an optimistic outlook for the cryptocurrency.
Joe Lee, Founder and CEO of DefiDive, also weighed in, pointing to several developments that have contributed to bitcoin’s recent strength.
“In the lead up to the rally a number of moves have occurred signalling a bull market run,” he stated.
“First observation we made earlier in the week was a slowing of net asset outflows of the Grayscale’s Bitcoin ETF (GBTC). The Grayscale ETF accounts for a majority of market volume in the Bitcoin ETF space which was seeing a huge volume of selling since the middle of January,” said Lee, a technology entrepreneur who has been involved with the crypto space for over a decade.
“The selloff triggered a dip in Bitcoin’s price on the spot market as liquidity left the space,” he claimed.
“Following the observation of net asset outflows was a second fundamental indicator, the arbitrage or price differential between the GBTC ETF and Bitcoin’s spot market,” the market observer noted.
“On Thursday 1st February, it was reported by Bloomberg that GBTC was trading at 0.02% premium over net asset value signalling the ETF finally reached parity with spot,” stated Lee, citing news reported in a Bloomberg article.
“Following that we saw sideways movement in the search of a breakout,” he said.
“Our analysts have observed that a consolidation of liquidity and a subsequent surge has come from liquidity in the institutional markets,” Lee emphasized.
“All eyes for capital inflows are now increasingly being dictated by institutional money,” he stated, speaking to the growing role of major players.
“ETF related volatility will continue as traditional money markets discover how to risk balance their portfolios with a new asset type.”
“However for us, eyes are on the next volatility trigger, the Bitcoin halving. At DefiDive, we anticipate a continued growth in liquidity sources and have a bullish forecast for 2024,” he concluded.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.