Bitcoin Crosses $65,000 on ETF-Led Demand Despite GBTC Outflows

(Bloomberg) — Some obstacles appear to be standing in the way of Bitcoin's current rally. The largest cryptocurrency rose for the second day in a row and approached all-time highs, driven by expectations of strong demand from exchange-traded funds at the start of the week.

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The most liquid token rose as high as $65,010 – its first move above $65,000 since November 2021 – before falling back to $64,917 as of 8:28 a.m. in London.

At the heart of this obsession with the largest cryptocurrency lies the seemingly insatiable demand for US Bitcoin ETFs, which began trading on January 11. Bitcoin has jumped by about 186% in the past 12 months.

Net inflows of $7.35 billion have been invested since the debut of US Bitcoin ETFs from some of the biggest fund names, including BlackRock Inc. and Fidelity Investments. Even massive outflows at one prominent company — nearly $9 billion in Grayscale Bitcoin Trust since the ETF was listed — haven't affected traders.

“Given reduced liquidity over the weekend, markets are moving north in anticipation that ETF inflows will continue tonight and prices will continue to rise,” said Hayden Hughes, co-founder of social trading platform Alpha Impact.

Traders are betting that the price will soon surpass the record of around $69,000, reached during the Covid pandemic in November 2021, given strong demand from ETFs and concern of missing out before the Bitcoin halving, which is expected in April of this year. After the halving – when the mining reward is halved – the supply growth of the coin can decline, increasing demand pressure.

Other tokens known as altcoins, including Cardano and Solana, also rose on Monday by 8% and 1%, respectively.

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Memes are rising

Small tokens, known as memecoins, also rose on the back of Bitcoin's rise. Dogecoin is up nearly 20% and the Shiba Inu is up 34% in the past 24 hours.

“This situation is reminiscent of the 2021 bull market, as retail traders look to make quick profits from rising prices in highly volatile tokens,” said Caroline Morrone, co-founder of digital asset derivatives liquidity provider Orbit Markets.

Trading in cryptocurrency derivatives, which reflects traders' attitudes, also indicated bullish expectations. Open interest in Chicago-based CME Group's Bitcoin and Ethereum futures market is just 1.8% away from record highs. The increase in the number of contracts outstanding is a sign of greater interest in cryptocurrency-related exposure and hedging among US institutions.

“Bitcoin's all-time highs should be tested in the short term, with the important level of 70,000 providing strong resistance,” Morrone said.

(Bitcoin price update in second paragraph)

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