Bitcoin experiences a significant surge in its largest weekly rally in the past four months

By Amanda Cooper and Alun JohnLONDON (Reuters) – Bitcoin saw a 5% increase on Friday to reach one-month highs. Analysts attributed this surge to increased buying ahead of April’s halving event, as well as a slowdown in recent outflows from exchange-traded funds. The price reached a session peak of $47,705, the highest since January, after the first U.S. listed spot bitcoin exchange traded products received regulatory approval. The world’s largest cryptocurrency was last up 3.5% at $46,946, set for a 10% increase this week, marking its most significant rise since October. Ether saw a 2.5% increase at $2,486. In January, Bitcoin hit a two-year high just above $49,000, but has since trended lower, under pressure from a “sell the news” wave of profit-taking after the Securities and Exchange Commission finally approved the ETFs. This drop in bitcoin went against the grain of other financial markets, as stocks, bonds, and gold all rallied in expectation for global central banks to cut interest rates. Policymakers have since pushed back against this, and economic data does not support the view that rates should fall anytime soon. However, risk assets like stocks have risen, with bitcoin resuming its march higher. Friday’s jump in price was said to be a function of a slowing in recent ETF outflows and a burst of buying ahead of April’s halving, according to analysts. “With bitcoin back up to $46,000 this morning, traders are clearly gearing up for the hotly anticipated halving event due in roughly two months,” Scope Markets’ chief markets analyst Joshua Mahony said. The next halving is expected in April, a process designed to slow the release of bitcoin, whose supply is capped at 21 million with 19 million already mined, by cutting the reward for producing the tokens in half. “Should historical trends continue to hold, traders will be hoping to see a bumper 2024 given the previous pattern of post-halving outperformance,” Mahony said. Bitcoin prices have typically rallied following halvings. Six months after the first halving in 2012, the price rose to $126 from $12. After the second halving in 2016, it reached $1,000 from $654 within seven months, and in 2020 it rose to $18,040 from $8,570 in the same time period. Furthermore, according to Markus Thielen, founder of digital asset research firm 10x Research, bitcoin also tends to perform during U.S. election years, coinciding with halving cycles in 2012, 2016, and 2020. QCP Capital said in a note on Thursday that some ETF outflows had eased, particularly from the Grayscale Bitcoin ETF, the largest by assets, which supports spot crypto prices. “Total inflows across all BTC ETFs are now positive,” QCP said. When the SEC approved the listing of ETFs in January, Grayscale, whose existing bitcoin trust was converted to an ETF at the time, experienced $2.7 billion in outflows the first week after, as early investors rushed to book profits, according to LSEG Lipper data. The outflows slowed down in the subsequent week to $1.5 billion, and had decreased to $701 million in the week ended February 7. Scope Markets’ Mahony noted that the recent rise in the dollar has affected crypto prices, but the effect was likely to diminish. (Additional reporting by Medha Singh in Bangalore; Editing by Harry Robertson and Alison Williams)

Author: OpenAI