Bitcoin ETFs Spark Surge in Crypto Market as Wall Street Embraces Digital Gold Rush

US Spot Bitcoin ETFs Drive Market Shifts and Record Inflows, Amplifying Cryptocurrency Fervor on Wall Street

Feb 29, 2024 - 08:53
Feb 29, 2024 - 08:53
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Bitcoin ETFs Spark Surge in Crypto Market as Wall Street Embraces Digital Gold Rush
Bitcoin ETFs Spark Surge in Crypto Market as Wall Street Embraces Digital Gold Rush

The New US spot Bitcoin exchange-traded funds (ETFs) has triggered significant shifts in the landscape of the original cryptocurrency market, driven by heightened demand for Bitcoin and attracting over $7 billion in net inflows within a mere two months. This surge in demand has propelled the price of the largest digital asset by over 45% this year, approaching the pandemic-era record high of nearly $69,000, further fueled by anticipation surrounding the impending reduction in Bitcoin's supply growth, known as the halving.

The emergence of these ETFs has notably altered the focal point of Bitcoin trading toward the United States, fostering an environment conducive to leveraged bets. This trend has elevated the cost of bullish wagers via perpetual futures to levels not seen since 2021, signaling a profound supply-demand imbalance within the market, as observed by CoinShares adviser Meltem Demirors on Bloomberg Television.

Bitcoin's upward momentum has remained steadfast, with the cryptocurrency experiencing a six-day rally, resulting in a remarkable 23% surge within that period alone. As of 8:03 a.m. Thursday in New York, Bitcoin was trading at $62,597, nearing the $64,000 mark reached on Wednesday.

Analyzing the impact of ETFs on various market segments reveals significant changes:

  • Leading Performance: Bitcoin's rally in 2024 has outpaced that of stocks, attracting traders drawn to its volatility.
  • US Influence: The ETFs calculate their net asset value based on dedicated benchmarks at the US market close each weekday, facilitating Bitcoin price discovery and causing trading volumes to surge during that period.
  • ETF Activity: Trading volume in spot Bitcoin ETFs, including offerings from industry giants like BlackRock Inc. and Fidelity Investments, surged to almost $8 billion on Wednesday amid the cryptocurrency's record-breaking ascent.
  • Spot Market: The value of Bitcoin transactions on major digital asset exchanges on Wednesday reached near-record levels for 2024.
  • Futures Trading: The funding rate for Bitcoin perpetual futures, popular among crypto speculators due to their absence of set expiry dates, is at its highest since 2021. This indicates a rush among traders to bet on price gains, with some willing to pay funds to speculators who maintain short positions.

Overall, the introduction of Bitcoin ETFs has catalyzed significant shifts in trading dynamics and market sentiment, underscoring the growing influence of institutional investment in the cryptocurrency space.

Also Read: Bitcoin Skyrockets Towards $59,000: Surging Towards Historic Highs Amid Crypto Craze

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