Bitcoin price is approaching a historical record

There has not been such a rapid rise in Bitcoin prices as on February 28 for more than three years – its value reached $64 thousand, adding almost $10 thousand. Less than 10% remains before updating the historical record – $69 thousand – and experts expect that this mark will be overcome. However, the cryptocurrency market currently looks overheated, so a correction is possible.

The price of Bitcoin (BTC) rose to $64,000 on Wednesday, February 28, the highest since November 15, 2021, according to Coinmarketcap. Moreover, less than 10% remained to the maximum ($69 thousand), set at the beginning of November 2021. The market has not recorded such rapid rises (almost $10 thousand compared to the previous day’s close) in the entire history of circulation of the leading currency. Moreover, confident growth occurs for three days in a row. And even taking into account the correction in the afternoon, the Bitcoin rate remained around $60.5 thousand, having added 17% since the beginning of the week. Other cryptocurrencies are also emulating Bitcoin’s positive performance. Thus, ether quotes were approaching $3.5 thousand, the maximum since April 2023.

Experts cite the main reason for the rapid growth of the exchange rate as the successful launch of exchange-traded funds whose asset is Bitcoin—spot ETFs on American exchanges (see Kommersant on January 11). In less than two months, these funds collected about 300 thousand BTC (about $18 billion) under their management. On February 26–27 alone, over $1 billion passed through them, says Roman Kaufman, co-founder of BerezkaDAO and Weezi. More than a month after the appearance of spot Bitcoin ETFs, those investors who had previously doubted and waited began to enter the funds, noted Vladislav Utushkin, founder of the MarsDAO group of companies.

The approaching halving remains a significant reason for bullish trading – a decrease in the rate of cryptocurrency generation, which will occur in April of this year. After halving, miners will mine approximately 450 BTC per day, which is 22 times less than demand, so market participants are preparing for changes and purchasing crypto, Mr. Utushkin emphasized. In each of the past bull cycles, the halving date fell right in the middle of the period of growth in the price of BTC. In other words, the duration of growth after the halving date was approximately equal to the growth period before the halving date, noted Oleg Novikov, investment director at Astero Falcon. Based on this, we can expect Bitcoin’s rise to continue for about 75 weeks after April, he estimates.

Analysts are convinced that the secondary reasons that support investor interest in Bitcoin should not be underestimated. Among them, they highlight the expectation that the Fed will soon move to lower the key interest rate, says Vladislav Utushkin. Market participants assume that the regulator will take such a step in the summer of 2024, and a reduction in the key rate will increase the investment attractiveness of high-risk assets, including cryptocurrencies. It is also possible that the United States will switch to a policy of quantitative easing amid the elections in the fall of 2024. Vladislav Utushkin is convinced that “the launch of the “printing press” can enhance the growth of the digital asset market due to the influx of liquidity.”

Geopolitics is also fueling demand for cryptocurrencies. “French President Emmanuel Macron allowed a scenario in which NATO countries could send their troops to Ukraine in the future. The escalation of the conflict could be another blow to the global economy, the uncertainty of which is forcing people to look for alternative instruments for saving. And many people turn their attention to cryptocurrencies,” says Mr. Utushkin.

After the rapid rise of the Bitcoin price above $55 thousand, investors were seized with excitement, this can be seen from the index of greed and fear, which sharply rose to 80 points, notes OKX Commercial Director Lennix Lai. The market is overheated, after such activity a correction is inevitable, experts point out. “You shouldn’t focus only on growth, since the market is cyclical, so drawdowns are obvious,” notes Mr. Kaufman. At the same time, closing the week above $57 thousand opens up Bitcoin’s movement to $69 thousand—the absolute maximum recorded in November 2021, Mr. Utushkin believes. And by the end of the year, according to Mr. Kaufman’s forecasts, the cost of BTC could reach $120–130 thousand.

Ksenia Kulikova