Bitcoin (BTC-USD) is on track to test new all-time highs as the rally in cryptocurrencies carries on with no signs of slowing down. This is a key part of this Bitcoin analysis.
BTC is up 16% this year, lifting the 12-month gain in the largest crypto by market capitalization to 110%. At $52,000 per token, Bitcoin’s price has now risen 225% from the low of $16,000 it fell to during the depths of the 2022 bear market. After a brief pullback in late January following regulatory approval of spot Bitcoin exchange-traded funds (ETFs), the rally in BTC has continued unabated. With more catalysts on the horizon, there’s every reason to believe that Bitcoin will surpass its all-time high of $68,789 in the coming months.
ETF Success
The dozen spot Bitcoin ETFs that launched on Jan. 11 of this year have proven to be wildly popular. Retail and institutional investors can now invest in BTC without having to physically own the digital asset or store it in a crypto wallet. As such, the amount of capital flowing into the spot Bitcoin ETFs and the daily trading volumes of the funds continue to skyrocket. In a little more than a month, nearly $10 billion has flowed into the two largest Bitcoin ETFs.
On Feb. 20, trading in Bitcoin ETFs hit its highest level since the investment vehicles made their debut in January, with 32,000 individual trades worth $2 billion occurring during the day. The ETFs have exceeded even the most optimistic expectations of industry watchers, and the euphoria has spread to the entire crypto sector. The price of Ethereum (ETH-USD), the second largest cryptocurrency, has topped $3,000 for the first time in two years as excitement builds for approval of spot Ethereum ETFs later this year.
Halving Event
The price increase that has accompanied the launch of the spot ETFs has pushed Bitcoin’s market capitalization above $1 trillion for the first time since 2021. While the launch of the ETFs has been a major catalyst for BTC, there is another, potentially bigger, catalyst coming. That would be the upcoming halving event that is expected to take place in April. A halving event is when the rewards given to Bitcoin miners are reduced by 50%, which lowers the volume of the cryptocurrency. This is a huge part of my Bitcoin analysis.
Past halving events have led Bitcoin’s price to test new all-time highs. Analysts and options traders are betting that Bitcoin’s price could surpass $70,000 right before the halving event, or shortly after it occurs. Additionally, BTC is catching tailwinds now from the continued rally in equities and should get a further boost once the U.S. Federal Reserve begins to lower interest rates, likely this summer. Lower rates should help to increase investors’ appetite for riskier asset classes such as cryptocurrencies.
Buy Bitcoin For Future Gains
There’s no reason to think the rally in BTC is played out. With spot ETFs available, a halving event coming up, and interest rates expected to come down in this year’s second half, there are plenty of catalysts to sustain the momentum in cryptocurrencies. Investors can and should take advantage of the ability to invest in BTC without having the spend a lot of money to physically own the crypto. And now is a good time to take a position before the April halving event occurs. Bitcoin is a buy. This concludes my Bitcoin analysis.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
