Bitcoin Surges on ETF Demand Despite GBTC Outflows

Bitcoin's upward momentum continues, driven by strong demand for exchange-traded funds (ETFs) and anticipation of reaching new price highs. The cryptocurrency saw a second consecutive day of gains, nearing its all-time peak, reaching $64,279 before settling at $64,090 as of 7:42 a.m. London time.

US-listed Bitcoin ETFs, which debuted on January 11, have played a key role in fueling the current rally. Major investment firms like BlackRock Inc. and Fidelity Investments have poured in a total of $7.35 billion into these ETFs. Despite significant outflows of nearly $9 billion from Grayscale Bitcoin Trust (GBTC) since the launch of the ETFs, market sentiment remains positive.

Traders are optimistic about Bitcoin surpassing its previous high of nearly $69,000, achieved during the Covid pandemic in November 2021. The strong demand for ETFs, coupled with concerns about missing out before the Bitcoin halving expected in April, reinforces this bullish outlook. The upcoming halving, which reduces mining rewards, could lead to a supply shortage and further drive up demand.

Altcoins like Cardano and Solana also experienced gains of 8% and 1% respectively on Monday.

The rise of meme coins, such as Dogecoin and Shiba Inu, mirrors the retail trading frenzy seen during the 2021 bull run. Retail traders are eager to capitalize on the volatility of these tokens amidst Bitcoin's rally.

Trading in crypto derivatives, particularly at Chicago-based CME Group's Bitcoin and Ether futures market, indicates a bullish sentiment. Open interest in these markets is nearing record highs, signaling increased interest in crypto exposure and hedging among US institutions.

According to Caroline Mauron, co-founder of Orbit Markets, Bitcoin's all-time highs may encounter strong resistance near the $70,000 level in the short term.

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