Bitcoin Market Capitalization Surpasses $1 Trillion
The total market value of all circulating Bitcoin, in other words, market capitalization, has crossed the $1 trillion mark for the first time since the end of 2021, according to data from CoinMarketCap. The price of the cryptocurrency has breached the $51,000 level for the first time since December 2021, marking an over 21% increase this year alone. This surge has been largely attributed to the successful launch of spot Bitcoin ETFs in the US, which has significantly lifted investor sentiment. The price rally continues the upward momentum that began in January last year.
Bitcoin’s Rise in Value
As per Coin Metrics data, the pioneer cryptocurrency has appreciated to $51,930 as of now. Earlier in the morning, Bitcoin was trading at $52,079 – its highest since December 2021. Combinedly, Bitcoin’s value has surged by 157% in 2023 due to anticipation of Bitcoin ETF approvals from the US Securities and Exchange Commission (SEC), which eventually took place in January this year. Last week, the net inflow of the newly launched spot Bitcoin ETFs reached a whopping $1.1 billion.
An ETF or Exchange-Traded Fund is a product that tracks the price movement of another asset, in this case, Bitcoin, without the necessity for owning it. However, ETF issuers will have to buy and sell Bitcoin to back up the derivative – a contract that commits parties to acquire/give up an asset under certain conditions. Generally, this transfer is due once the contract is over.
New Rally Following Bitcoin’s Halving Event
Bitcoin’s price dipped for a while after the initial excitement of the ETF approval subsided. The cryptocurrency resumed its rally at the end of January, as investors now anticipate ‘halving’ – a process that halves the reward given to Bitcoin miners. This event occurs every four years, with the next one scheduled for April 2024. Historically, a ‘halving’ precedes Bitcoin reaching new record highs in the subsequent months. The last Bitcoin record high was just under $69,000 in November 2021.
Growth in Other Cryptocurrencies
Other cryptocurrencies are also on the rise. According to CoinDesk, the price of Ethereum hit $2760 on Wednesday, its highest level since May 2022. Investors are hopeful that an Ethereum ETF could get approval from the US Securities and Exchange Commission this year.
