Bitcoin is on steroids, market valuation set to hit $1 trillion

Recent price action affirmed the recent approval of Bitcoin exchange-traded funds (ETFs) is a big deal in the crypto market, as Bitcoin clocked its highest level since December 2021

The flagship crypto asset price has gained nearly a fifth of its value and traded above $50,000 with a market valuation close to $1 trillion.

Spot Bitcoin ETFs have been successfully introduced by the biggest mutual fund managers in the world, BlackRock, Fidelity, and ARK 21Shares. In less than a month, the assets of these instruments have topped $10 billion.

Additionally, Jung also brought attention to the impending Bitcoin halving event, which is another important point. This roughly four-year-old event lowers the rate of new Bitcoin creation, increasing their scarcity. All previous Bitcoin halvings have produced large gains in the past.

A recent study indicates that retail traders generally follow bull runs, joining the cycle a few days or weeks after significant price milestones.

Other indicators, like the desire for stablecoins in China, don’t indicate a rise in activity among retail traders, either. Bear markets result in a discount, while excessive retail demand for cryptocurrencies usually pushes the stablecoin premium above 1.5%.

The top traders’ long-to-short ratio at Binance is at 1.35, up from 1.24 on February 9. This suggests that, despite the 14% weekly gain, arbitrage desks and whales have raised their leveraged long positions.

However, Bulls may view the lack of enthusiasm on the retail side as a sign that the typical FOMO (fear of missing out) behavior exhibited by regular investors has not yet materialized.

The bitcoin bull market, which started in January 2023, entered the FOMO stage after a brief decline following the spot ETFs’ introduction on January 11.

The price of bitcoin fell to as low as $38,500 just days after the new spot ETFs opened for business, even though the new ETFs brought in billions of dollars in their initial weeks of trading. Investor attention seems to be focused on the billions leaving the high-fee Grayscale Bitcoin Trust (GBTC).

The price of Bitcoin peaked in November 2021 at roughly $69,000. The year 2022 was disastrous due to the collapse of the Terra ecosystem, the dissolution of cryptocurrency exchange FTX and its brilliant founder Sam Bankman-Fried, as well as several other high-profile collapses in the crypto business.

Recall, Bitcoin’s closing price in 2022 was slightly over $16,000, a 75% decrease from its peak. Many other crypto assets saw significantly worse losses. Layoffs and store closures were frequent in the business along with price reductions and brand collapses; this pattern persisted in 2023.

Although 2023 will go down in history as a significant bull market for cryptocurrencies, most of the year saw rather flat price activity for Bitcoin.

In October, the price of Bitcoin was just $27,000, which was a rather tiny recovery given its previous peak of over 65% for 2023.

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