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Why is Bitcoin going up? – Forbes Australia Consultant
So what’s happening? BTC surged on Tuesday, March 5 after newly approved Bitcoin spot ETFs saw record daily inflows and the amount of Bitcoin held on centralized exchanges fell to a new low. Demand for Bitcoin, largely driven by new ETFs, is outpacing the supply of available BTC in the market, creating a situation where the price is rising to bring sellers into the market to meet demand.
This surge is an extension of the run that began in October last year, when news regarding BlackRock’s plans for a BTC Exchange Traded Fund (ETF) pushed the price to new highs for 2023. In early January , 11 BTC spot ETFs were approved for trading in the United States for the first time in history, marking a significant milestone for the cryptocurrency market and solidifying Bitcoin as a legitimate investment in the eyes of institutions.
The launch of the ETFs occurred shortly after approval, and all 11 ETFs experienced significant capital inflows almost immediately, making it one of the most successful ETF launches in history, second only to gold. However, since their launch, capital flows into these ETFs have increased and money has flowed heavily out of gold funds, with analysts predicting that Bitcoin funds could surpass the total size of gold funds in less than two years. current trajectory.
Cryptocurrency-related stocks have also shown some life, with Coinbase (COIN), Mara Digital (MARA) and Riot Platforms (RIOT) all posting double- or triple-digit returns since the ETFs were approved.
There are also pending applications for Ethereum spot ETFs from many of the same institutions that managed to get Bitcoin ETFs approved. Crypto bulls see the recent approvals as an indication that approval for a spot Ethereum ETF is also imminent. Currently, just like Bitcoin before January, all existing Ethereum ETFs in the US can only trade Ethereum futures.
Australians now have to pay more than $100,000 for a single Bitcoin. This marks a top gain and marks a nearly 350% gain from its low early last year
Futures are investment vehicles that derive their value from the expected future price of an asset, eliminating the need to physically hold the underlying asset. This characteristic means that they do not generate any direct demand for the asset itself.
As with Bitcoin, an Ethereum spot ETF would represent a substantial development as the fund would support stocks with Ethereum holdings, requiring the purchase of large amounts of ETH from the open market. Crypto bulls are confident that this would have a significant positive impact on the price of Ethereum, just as it did for Bitcoin.
Over the past 12 months, a number of institutional investors have also entered the cryptocurrency fray in ways other than simply using ETFs. Following BlackRock’s request, Deutsche Bank announced that it has applied for a license to hold digital assets in custody in Germany. This institutional interest in cryptocurrencies is a sign of legitimacy for the sector, which will inevitably attract investors who were previously dubious about the prospects of digital assets.