Bitcoin surged beyond $60,000 for the first time in more than two years, fueling speculation that demand for the currency is expanding beyond dedicated digital-asset enthusiasts.
The largest cryptocurrency has already risen more than 40% this year, thanks in part to the successful debut of US exchange-traded funds that contain the coins, which have garnered more than $6 billion since trading began on January 11.
Bitcoin last traded at $60,000 in November 2021, having hit an all-time high of around $69,000 earlier that month.
"It's pretty nuts," said Ryan Kim, the head of derivatives at FalconX, a digital asset prime brokerage.
An upcoming reduction in Bitcoin’s supply growth, known as the halving, is adding to the optimistic sentiment. That has helped to extend a prolonged rally that has also stoked speculative appetite for smaller tokens ranging from Ether to Dogecoin.
“We are starting to see a pretty clear FOMO kind of rally,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “More and more people are just convinced to buy.”
Bitcoin is on track for its largest monthly increase since December 2020, when it surged 50% to approximately $9,600.
Bitcoin's value has more than tripled since the beginning of last year, rebounding from a 64% drop in 2022, in a stunning recovery after a series of crypto-industry scandals and bankruptcy that raised doubts about the durability of digital assets.
Digital tokens are rising despite investors' reduced expectations for softer monetary policy this year, as demonstrated by an increase in US Treasury yields. Bitcoin beat traditional assets such as equities and gold in 2024.
“This reversal is all the more impressive in the light of central banks signaling they intend to keep rates high a while longer, eroding the theory that the next crypto bull would be driven by dropping interest rates,” said Michael Safai, co-founder at quantitative trading firm Dexterity Capital.
The enormous inflows into Bitcoin ETFs have prompted some industry experts to warn of a potential supply squeeze as fresh coins from miners are unable to meet demand.
According to estimates, over 80% of Bitcoin's supply has not changed hands in the last six months, potentially worsening the crunch and adding to upward price pressure.
The nine new spot ETFs have more than 300,000 Bitcoin, which is seven times the number of fresh coins created since January 11. After the halving, which is planned in late April, the number of new coins mined per day will drop from 900 to 450.
Advocates believe that if demand remains constant and the supply of new coins is reduced by half, the price will rise further.
“All of this combined makes for a supply and demand imbalance,” said Dan Slavin, founder of Chainview Capital, a crypto hedge fund. “More demand than supply means price higher, and with BTC price volatility, price higher doesn’t mean 10%, it means a whole lot more.”
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