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Business News/ Markets / Cryptocurrency/  Bitcoin surpasses $59,000 mark, highest level since December 2021; Why is it rising?
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Bitcoin surpasses $59,000 mark, highest level since December 2021; Why is it rising?

Bitcoin showed a 4.4% increase, reaching $59,259, its highest level since December 2021. This upward momentum was fueled by inflows into new U.S. spot bitcoin exchange-traded products.

Bitcoin price REUTERS/Marco Bello (REUTERS)Premium
Bitcoin price REUTERS/Marco Bello (REUTERS)

Bitcoin experienced its fifth consecutive day of surge, nearing the $60,000 mark on Wednesday. This upward momentum was fueled by inflows into new U.S. spot bitcoin exchange-traded products, propelling it by 39.7% throughout February. If sustained, this would mark Bitcoin's most substantial monthly rally since December 2020.

As of the latest update, Bitcoin showed a 4.4% increase, reaching $59,259, its highest level since December 2021. Simultaneously, Ether, another leading cryptocurrency, witnessed a 2.2% rise to $3,320, hitting yet another two-year peak.

Investors and traders have been increasingly drawn to Bitcoin, particularly in anticipation of April's halving event. This event is a crucial aspect of Bitcoin's design, aimed at slowing down the release of new bitcoins into circulation.

On February 26, Bitcoin surged to its highest level in more than two years, hitting $57,000. The cryptocurrency saw a 9 percent increase, briefly touching the significant $57,000 mark for the first time since November 2021, as per CoinDesk. However, it subsequently retreated to approximately $56,500 levels.

Bitcoin has surged over 200 percent from its lows in November 2022, following the FTX incident, according to Zakhil Suresh, CEO of crypto investment platform BitSave.

"This rally has been primarily triggered by institutional allocation and the increased retail participation in the last few months due to Bitcoin Spot ETF applications in the US and upcoming Bitcoin halving," Suresh said.

He further noted, “Digital asset investment products saw weekly inflows totalling $598 million last week, according to Coinshares, marking the fourth consecutive week of inflows. Bitcoin saw $570 million inflows last week, bringing year-to-date inflows to $5.6 billion."

Why Bitcoin prices are rising?

"Bitcoin is approaching new yearly highs off the back of increased spot demand and momentum traders taking positions after a week of consolidation," Chris Newhouse, a DeFi analyst at Cumberland Labs told Bloomberg.

Even with the upward movement, liquidations remain relatively moderate in the current price dynamics, as leveraged long positions swiftly fill the void left by closed short positions. 

Newhouse highlighted a discernible uptick in the open interest, representing outstanding contracts, for perpetual Bitcoin futures. Concurrently, short positions have been pressured to close amid the recent rally, possibly as a result of new long positions entering the market.

(With inputs from Reuters and Bloomberg)

 

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Published: 28 Feb 2024, 02:49 PM IST
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