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Bitcoin surpasses $60,000, marking its strongest monthly rally since December 2020

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On February 28, Bitcoin, the world’s largest cryptocurrency, surpassed $60,000 as its price rally persisted, fueled by a surge in funds flowing into new US spot bitcoin exchange-traded products.

This marks Bitcoin’s most significant monthly price rally since December 2020.

During today’s trading session, Bitcoin peaked at $60,131, a 6% increase from the previous day and the highest price since November 2021, nearing the $70,000 mark. Traders are flocking to Bitcoin ahead of April’s halving event, designed to slow the cryptocurrency’s release.

Additionally, the prospect of the Federal Reserve implementing rate cuts this year has fueled investor interest in higher-yielding or more volatile assets.

Ben Laidler, global markets strategist at retail investment platform eToro, noted that Bitcoin’s momentum is driven by consistent inflows into new spot ETFs and anticipation of April’s halving event and potential Fed rate cuts in June.

This month, the total value of all circulating bitcoins surpassed $2 trillion for the first time in two years, as reported by crypto platform CoinGecko. In just four months, the token’s price has doubled.

Bigger bitcoin exchange-traded funds (ETFs), particularly those managed by Grayscale, Fidelity, and BlackRock, have experienced increased interest this week. Trading volumes for these ETFs surged significantly, with approximately 110 million shares from the top three changing hands on Monday and Tuesday. This accounts for about 51% of the 215 million shares traded in the market’s most valuable companies, such as Apple, Microsoft, and Nvidia, according to LSEG data. Three weeks ago, this percentage was closer to 15%.

Joseph Edwards, head of research at Enigma Securities, noted that the increase in ETF inflows indicates advisors are actively promoting ETFs to their clients.

Data from LSEG revealed that the ten largest spot bitcoin ETFs attracted $420 million in inflows on Tuesday alone, marking the highest influx in almost two weeks.

Antoni Trenchev, cofounder of Nexo crypto exchange, highlighted that 70% of bitcoin supply has remained unmoved for a year, with institutions like BlackRock and Fidelity acquiring the remaining supply. This trend coincides with the imminent halving of miner rewards, further driving interest in bitcoin.

MicroStrategy, a software firm and crypto investor, disclosed purchasing approximately 3,000 bitcoins worth $155 million. Additionally, Reddit, a social media platform, revealed buying small amounts of bitcoin and ether in a regulatory filing.

Meanwhile, ether, the world’s second-largest cryptocurrency, which supports the Ethereum blockchain network, increased by 3.2% to $3,353. Ether’s price surged by 47% in February, marking the largest monthly gain since July 2022. Some investors are hopeful that U.S. regulators will approve applications for ETFs based on spot ether. Edwards from Enigma Securities noted a steady upward trend in prices, suggesting a measured market environment. However, he also acknowledged a sense of FOMO (fear of missing out) among investors.

What Caused Bitcoin’s Positive Momentum?

Traders jumped into bitcoin after April’s halving event, intended to slow down cryptocurrency release, while Federal Reserve rate cuts further fueled Bitcoin’s upward trend.

Additionally, the total value of circulating bitcoins surpassed $2 trillion this month, marking the highest point in two years, as reported by crypto platform CoinGecko.

What Caused the Surge in Bitcoin?

Major banks and investment firms now offer Bitcoin services, making it easier for investors to access digital assets.

Worries about inflation have led investors to see Bitcoin as a hedge against currency devaluation.

Bitcoin’s limited supply of 21 million coins attracts those aiming to preserve wealth.

Companies like Tesla, Square, and MicroStrategy have put sizable portions of their treasuries into Bitcoin, showing faith in its potential as a long-term hedge against inflation and currency devaluation.

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