The cryptocurrency market has been rocked by the recent approval of Bitcoin exchange-traded funds (ETFs), which has sent the bitcoin price to its highest point since December 2021. With a gain of almost 25%, the leading cryptocurrency has risen past $50,000 and is now valued at around $1 trillion.
Prominent mutual fund managers, like ARK 21Shares, Fidelity, and BlackRock, have successfully launched spot Bitcoin exchange-traded funds (ETFs), and in less than a month, they have managed assets exceeding $10 billion. In addition, market watchers highlight the impending halving of Bitcoin, a four-year event that lowers the rate of new Bitcoin creation and increases its scarcity. Bitcoin price halvings have historically resulted in notable price increases.
According to a recent study, retail traders frequently enter the market cycle a few days or weeks after significant price milestones, after bull runs. Despite this optimistic outlook, indicators such as the demand for stablecoins in China do not show increased activity among retail traders. Stablecoins usually trade at a discount in bear markets, and the stablecoin premium often rises above 1.5% due to strong retail demand for cryptocurrencies.
Despite the 14% weekly gain, arbitrage desks and whales have expanded their leveraged long holdings, as evidenced by the rise in the long-to-short ratio among top Binance traders from 1.24 on February 9 to 1.35 on February 10. On the other hand, some experts see the absence of retail enthusiasm as evidence that ordinary investors’ normal FOMO behavior has yet materialized to materialize.
The January 2023-starting Bitcoin bull market entered the FOMO stage after a minor dip after the January 11 launch of spot ETFs. Bitcoin’s price fell as low as $38,500 shortly after the new spot ETFs were introduced, even though billions of dollars were poured into these products within the first few weeks of trading. Investorscoming less interested in the high-cost Grayscale Bitcoin Trust (GBTC).
In November 2021, the price of Bitcoin peaked at over $69,000. In contrast, 2022 was characterized by several high-profile collapses in the cryptocurrency business, including the collapse of the Terra ecosystem and the breakup of cryptocurrency exchange FTX and its founder, Sam Bankman-Fried.
With a closing price of just over $16,000 in 2022, bitcoin had dropped 75% from its peak. Throughout the year, there were a lot of layoffs, store closings, price reductions, and brand failures; this trend continued into 2023. Even though there was a strong bull market for cryptocurrencies, Bitcoin’s price movement was largely stagnant throughout 2023. Just $27,000 was the price of Bitcoin in October, which is a slight rebound from its last record, which saw gains of more than 65% in 2023.
