(Finance) – It’s again historical record for Bitcoin which, in the last session of the week, has the ceiling of 70 thousand dollars was also breached. A level never reached before by the cryptocurrency, which seems destined not to stop the rally started in the last months of 2023. On a day characterized by strong volatilityBitcoin reached a peak of $70,170and then immediately fell back below this level and concluded at 69 thousand, still recording a 10% increase over the week. Today the crypto trades at $68,284, slightly down compared to last midnight. The market capitalization reached $1,342 billion.
ETFs and Halving
Among the factors that are pushing Bitcoin is the launch of some series of ETFs on this financial instrument, long pondered by the SEC, the American Consob, which in the end put aside all its doubts and, strengthened by the new regulation of the sector, gave its approval. The ETF certainly makes investing in Bitcoin accessible to everyone, not just institutional ones, and therefore helps fuel demand.
The other element that triggered the Bitcoin run is the halvingan event that occurs every four years, when the value of the reward paid to miners for each block is halved. The first halving took place in 2012 (the launch of Bitcoin dates back to 2009) and the last one will be in 2140, when the quantity of Bitcoin will reach 21 million and no more will be produced. The next halving is scheduled for the last week of April and, as always happened on these occasions, the market anticipated the event, causing the value of the cryptocurrency to rise.
Friday’s surge
In reality, yesterday’s surge can be attributed to data on the US labor marketwhich was able to create 275 thousand places exceeding expectations, and allaudition in the week of Fed Chairman Jerome Powell before Congress, which fueled the expectation of a possible interest rate cut in June. In fact, the reduction in the cost of money would put pressure on the dollar and US Treasury yields, benefiting Bitcoin as an alternative investment.
What the analysts think
“Cryptocurrency has moved beyond its niche status, experiencing a fundamental increase in demand within a clear regulatory framework,” he explains Eric Demuth, co-founder and CEO of Bitpandaadding “Bitcoin’s upcoming Halving, scheduled for April, is expected to drive its price further higher, in line with historical data indicating long-term price support following previous halving events. In summary, we observe numerous positive indicators for 2024 which will give a boost to the cryptocurrency market.”
To explain whether the current rally can continue, Massimo Siano, Managing Director and Head of Southern Europe at 21Sharesrefers to a fundamental “on-chain” indicator, namely the MVRV Z score. “This parameter – explains the expert – provides information on the market positioning of Bitcoin, comparing its current market value with respect to its realized value (obtained through the average price of all BTC purchases, taking into account the price at which each Bitcoin was last moved on the blockchain and not the current market price.) Historically, a high “Z-score” suggests potential overvaluation, while a low score suggests undervaluation. Currently, the MVRV Z stands in a relatively lower range than to the levels achieved by in March and November 2021this implies that the Bitcoin is still seen as ‘a good deal’ by market players”. “The MVRV Z is however only one of the many tools at our disposal – warns Siano – and should always be compared with other indicators to make informed and considered decisions. In fact, with 99.9% of the current circulating supply in positive territory, we could potentially expect Bitcoin to suffer some short-term sales by those investors who want to guarantee the profits achieved. However, we at 21Shares believe that these will be followed by one continuation of the rally, in view of the long-awaited halving, which will take place on April 18th.”
(Photo: © Wit Olszewski / 123RF)