Bitcoin, the world’s leading cryptocurrency, reached an unprecedented high on Tuesday, hitting a remarkable $68,978. This surge marks a significant milestone, surpassing its previous peak of $68,789 established on November 10, 2021, and igniting a fresh wave of excitement in the crypto market reminiscent of the frenzy seen during its last boom.
The cryptocurrency’s latest ascent comes amid heightened interest fueled by the introduction of spot bitcoin exchange-traded funds (ETFs) in January. These ETFs, designed to provide everyday investors with exposure to digital assets, have exceeded expectations, according to industry experts.
Matt Hougan, chief investment officer at Bitwise Asset Management, expressed astonishment at the overwhelming demand for these funds, which have paved the way for widespread anticipation of a record-breaking year for bitcoin.
With the influx of investment, some financial experts are now predicting that bitcoin could soar above $100,000 before the end of 2024. This optimism has not only bolstered bitcoin but has also led to a surge in other cryptocurrencies and related stocks. Ether (ETH-USD), the second-largest cryptocurrency, has notably outperformed bitcoin by over 7% since the beginning of the year, while meme coins like dogecoin (DOGE-USD), shiba inu (SHIB), and dogwifhat (WIF) have also witnessed significant gains.
The launch of bitcoin ETFs has attracted substantial investment, with nearly $8 billion flowing into these funds within just two months. Major players in traditional finance, including BlackRock and Fidelity Investments, have contributed significantly to this influx of capital, providing a substantial boost to prominent crypto trading platforms such as Coinbase and Robinhood.
However, the surge in trading activity has not been without its challenges. Last week, Coinbase experienced technical issues resulting in some users temporarily seeing zero balances in their accounts. Despite reassurances from CEO Brian Armstrong regarding the safety of funds, similar incidents were reported by individual customers on Monday.
The frenzy surrounding bitcoin has also highlighted the fundamental economic principle of supply and demand. The introduction of ETFs has led to increased demand for bitcoin, outstripping the rate at which new coins are being created. This supply-demand imbalance has contributed to the cryptocurrency’s soaring valuation.
Analysts predict further supply constraints for bitcoin in the coming year, with a scheduled ‘halving’ event expected to reduce the daily supply of new coins by half. Mark Connors, head of research for crypto asset manager 3iQ, views this as a significant opportunity, emphasizing that the inability to produce more bitcoin to meet demand could further drive up its price.
While price targets vary among financial institutions, there is consensus among many experts that bitcoin’s upward trajectory is far from over. VanEck, for instance, has set a 2024 price target of $80,000 for bitcoin, with other estimates reaching as high as $450,000 per coin in the coming years.
However, alongside the bullish outlook, there are potential challenges ahead. The US government’s seizure of a substantial amount of bitcoin since 2020, coupled with the need for institutional investors to rebalance their portfolios, could impact the supply-demand dynamics of the cryptocurrency market.
Despite these uncertainties, interest in bitcoin continues to grow, with many predicting that the current rally is only the beginning of what lies ahead. Alex Thorn, head of research for Galaxy Digital, believes that the crypto market has yet to reach its full potential, indicating that the journey for bitcoin is far from over.
