(Bloomberg) – There appear to be few obstacles standing in the way of the current Bitcoin rally. The largest cryptocurrency rose for a second straight day and neared its all-time high, driven by expectations of strong demand for exchange-traded funds to start the week.
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The most liquid token rose as high as $65,010 – its first rise above $65,000 since November 2021 – before falling back to $64,917 as of 8:28 a.m. London.
At the heart of this hype surrounding the largest crypto token is the seemingly insatiable demand from US-listed Bitcoin ETFs, which began trading on January 11th. Bitcoin is up about 186% in the last 12 months.
Since the debut of U.S. Bitcoin ETFs from some of the biggest fund names, including BlackRock Inc. and Fidelity Investments, net inflows of $7.35 billion have been invested. Even outsized outflows at one big-name company — nearly $9 billion at Grayscale Bitcoin Trust since the ETFs listed — haven't swayed traders.
“With low liquidity over the weekend, markets are moving north in anticipation of ETF inflows continuing tonight and prices continuing to rise,” said Hayden Hughes, co-founder of social trading platform Alpha Impact.
Traders are betting that the price will soon surpass the record of nearly $69,000 set during the Covid pandemic in November 2021, amid strong demand for ETFs and concerns over the Bitcoin halving that took place in April this year is expected to be missed. After the halving – when the reward for mining is halved – the coin's supply growth could decline, which would further increase demand pressure.
Other tokens known as altcoins, including Cardano and Solana, also rose 8% and 1%, respectively, on Monday.
The story goes on
Memes are rising
Small-cap tokens, so-called meme coins, also rose in the wake of the Bitcoin rally. Dogecoin is up almost 20% and Shiba Inu is up 34% in the last 24 hours.
“This is a situation reminiscent of the 2021 bull market, with retail traders looking to make quick profits from rising prices in highly volatile tokens,” said Caroline Mauron, co-founder of digital asset derivatives liquidity provider Orbit Markets.
Crypto derivatives trading, reflecting traders' positions, also signaled an optimistic outlook. Open interest in Chicago-based CME Group's Bitcoin and Ether futures market is just 1.8% away from their respective record highs. The increase in the number of outstanding contracts is a sign that US institutions are becoming more interested in crypto-related exposure and hedging.
“Bitcoin’s all-time highs should be tested in the near term, with the key 70,000 level providing strong resistance,” Mauron said.
(Bitcoin price update in second paragraph)
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