Prices of Bitcoin on Monday surged to an all-time high of over $72,000 as demand for the so-called safest crypto asset rose following the London Stock Exchange’s (LSE) approval to accept application for Bitcoin and Ethereum exchange traded notes (ETN), experts say. Bitcoin was trading at $72,060 at 6:23 pm IST.
Bitcoin prices have been sharply rising since January after the US Securities and Exchange Commission on January 10 approved 11 spot Bitcoin exchange traded funds (ETF), to be offered by asset managers including BlackRock, Vanguard, Franklin Templeton, Valkyrie, Fidelity and Invesco, among others.
“Several factors are responsible for the resurgence in cyrpto asset prices – institutional investors are recognising Bitcoin’s value, the approval for spot Bitcoin ETFs has made investing more accessible, and anticipation for the upcoming Bitcoin Halving event is driving the market sentiment,” Sumit Gupta, CoinDCX co-founder, told FE. The prospect of Ethereum ETFs is also adding to the positive outlook, he said.
At CoinDCX, Gupta said, there has been a significant uptick in trading activity, with the volume increasing fivefold since the start of February, reaching approximately $25 million. Moreover, there has been a notable rise in the number of users depositing both crypto and Indian rupee into the platform.
According to Rajagopal Menon, vice-president at WazirX, Bitcoin ETFs have significantly influenced market dynamics, with daily purchases averaging 10,000 Bitcoins, far outstripping the daily production rate of 900.
Collectively, assets under management across the ten major Bitcoin ETFs have surged to $50 billion, he said. BlackRock’s Bitcoin ETF leads the pack, amassing over $10 billion in assets, while Fidelity’s ETF has over $6 billion in assets.
The Bitcoin ETFs are just the first phase of institutional investment into crypto, Menon said. The next wave of institutional money is anticipated to come from public pension funds, which can now invest in Bitcoin through ETFs in a regulated manner. Sovereign wealth funds, which have remained relatively quiet on the crypto front, could now gain exposure to Bitcoin without the need to directly purchase or hold it.
Says Parth Chaturvedi, investment lead at CoinSwitch Ventures, “Bitcoin prices had biggest absolute gain in prices during February, surging higher by almost $20k.This year, we will see MICA, which will bring EU-wide crypto regulations. We can get some more clarity on crypto regulations after elections in the US and India. While short-term volatility will exist, in the longer term, BTC is now being compared to “digital gold”, as it is a scarce asset which has a fixed supply schedule, making it an ideal store of value.”
Outlook
Gupta says the outlook for Bitcoin appears promising as it continues to solidify its position as a mainstream investment option. Factors such as institutional adoption, historical price movement patterns after Bitcoin Halving exercise in April will be the key drivers.
Other cryptos like Ethereum are also experiencing significant growth and adoption, driven by their utility in DeFi and the broader blockchain ecosystem. However, it becomes essential for investors to consider the underlying fundamentals and ecosystem developments when assessing the long-term prospects of these assets.
Menon said the outlook for Bitcoin and the broader cryptocurrency market can be summarised into two scenarios: immediate breakout, wherein Bitcoin swiftly breaks its all-time highs and doubles in value within weeks, capturing most of the market’s focus. Altcoins, including Ethereum, may not see significant gains until Bitcoin’s rally temporarily slows down, he said.
Other likely case could be consolidation before a broader rally. Following this, Bitcoin accelerates upwards, potentially doubling in value. Altcoins, then, may also start their rallies, benefiting from the overall positive market sentiment. In both the scenarios, he says, Bitcoin is poised for a significant growth.
In India, however, the Reserve Bank of India remains firm on its stance that cryptocurrency holds no real backing and poses a threat to financial system resilience.
