Bitcoin set for longest winning run in a year on steady ETF inflows, cryptocurrencies climb
The more-than-a-decade-old Grayscale Bitcoin Trust, the largest portfolio dedicated to the token, converted into an ETF the same day the new funds went live, prompting outflows of more than $US6 billion from the Grayscale vehicle, though that has since slowed.
The batch of 10 ETFs have attracted a net $US2.8 billion overall.
Hype over the ETFs fuelled a bitcoin revival last year, briefly taking the token past $US49,000 on the day they began trading. A multi-day, $US10,000 sell-off then ensued as investors booked profits and waited to see how the ETFs fared. The subsequent rebound has brought $US50,000 into view, a level last seen in 2021.
Optimism about the quadrennial bitcoin halving due in April is also filtering across crypto. Halving cuts the quantity of bitcoin that miners receive for operating the powerful computers that verify transactions on the blockchain. The event is often viewed a support for prices based on historical precedent.
Previous halving events “preceded strong bull runs”, a team including DBS Bank chief economist Taimur Baig wrote in a note.
“There is a simple economic reason why prices should rise. As the reward for mining decreases, the price for mining output (namely bitcoin) must increase to compensate and not trigger a withdrawal of computational resources by miners,” the team said.
Aside from ETF inflows, sentiment toward bitcoin is “typically positive” during the Lunar New Year holidays that are under way in Asia, Fundstrat Global Advisors wrote in a note.
Bitcoin still remains about $US20,000 below the record high the token hit in 2021, during a pandemic-era bull run oiled by easy money.
Additional reporting: Elijah Nicholson-Messmer and Muyao Shen
Bloomberg
Bloomberg
