Bitcoin’s recent price surge to over $65,000 has been part of a larger rally that has unfolded over the past few weeks. At its peak, Bitcoin reached $65,516.87, accompanied by a staggering market capitalization exceeding $1.2 trillion. This surge represents a 5.4% increase within a 24-hour period, reflecting the rapid upward momentum Bitcoin has experienced.
The driving force behind this surge is primarily attributed to FOMO, or the fear of missing out, particularly among institutional investors. These are large organizations, such as hedge funds, asset managers, and corporations, that manage substantial sums of money on behalf of their clients.
The approval of a spot Bitcoin Exchange-Traded Fund (ETF) by the U.S. Securities and Exchange Commission (SEC) in January has played a significant role in catalyzing this institutional interest.
This approval provided institutional investors with a more accessible and regulated way to invest in Bitcoin, leading many to enter the market. As a result, institutional participants have collectively acquired over 300,000 Bitcoins, creating a scarcity in the supply of available coins.
The supply-demand dynamics further favor price increases due to the significant difference between the rate at which new Bitcoins are produced and the rate at which they are being acquired by spot Bitcoin ETF issuers. Currently, only approximately 900 new Bitcoins are mined each day through a process called mining.
In contrast, the issuers of spot Bitcoin ETFs are acquiring an average of 10,000 Bitcoins daily. This substantial demand outstripping the limited supply puts upward pressure on Bitcoin’s price.
The impending Bitcoin halving event adds another layer of scarcity to the equation. The Bitcoin halving occurs approximately every four years and involves cutting the rate of new Bitcoin issuance in half.
This event reduces the number of new Bitcoins entering circulation, making them even scarcer assets. The upcoming halving, anticipated to decrease the new supply by 50%, is expected to exacerbate the supply-demand imbalance, potentially leading to further price appreciation if demand continues to remain robust.
Bitcoin’s price is now nearing its previous all-time high of $68,789.63, sparking optimism among investors that it may surpass this level in the near future. Despite the possibility of short-term corrections or price fluctuations, experts maintain confidence in Bitcoin’s long-term prospects.
Many believe that Bitcoin’s robust fundamentals, including its limited supply and growing adoption as a store of value, could drive its price to new heights. Some even speculate that Bitcoin’s value could eventually reach $1 million per coin.
