Bitcoin price reaches historic high, followed by sudden drop

On Tuesday, bitcoin price soared to a new peak of $69,202, surpassing the previous record of $68,999.99 set in November 2021
The image shows an artists imagination of a bitcoin in front of a trading screen. — Freepik
The image shows an artist's imagination of a bitcoin in front of a trading screen. — Freepik

Bitcoin price on Tuesday soared to a new peak as investors’ interest shifted towards the US spot exchange-traded cryptocurrency products and expectations of a decline in global rates.

Recently, the world's largest cryptocurrency climbed to $69,202, surpassing the previous record of $68,999.99 set in November 2021.

Bitcoin price today

This surge follows the approval of 11 spot bitcoin ETFs by the Securities and Exchange Commission in late January. However, bitcoin's value later dipped to approximately $63,400, a 7% decrease.

Nathan McCauley, CEO and co-founder of Anchorage Digital, commented on the significance of this milestone for the cryptocurrency sector, highlighting the robust participation of traditional financial institutions.

Why is bitcoin dropping?

Experts suggest that bitcoin's current rally, with a nearly 160% increase since October (44% of which occurred in February alone), could be more sustainable than the 2021 surge. This uptick contrasts sharply with 2022's prolonged market downturn, characterised by corporate bankruptcies and scandals.

Significant investments were observed in US spot bitcoin funds, with a notable $2.2 billion inflow in the week ending March 1, predominantly into BlackRock's iShares Bitcoin Trust IBIT.O.

Steve Sosnick, chief strategist at Interactive Brokers, noted bitcoin's steep ascent and the consequent profit-taking.

The crypto market, particularly bitcoin, has also gained momentum from the potential of a US interest rate cut by the Federal Reserve. Alvin Tan from RBC Capital Markets pointed out the link between bitcoin's rally and the positive market sentiment, as evidenced by record highs in major stock indices.

Amidst this crypto frenzy, gold too reached an all-time high, surpassing $2,100 per ounce, driven by predictions of an impending US rate cut.

The forthcoming bitcoin halving event in April, which reduces the token release rate and miner rewards, along with the capped bitcoin supply, are additional factors fueling investor interest.

Despite its volatility and limited real-world applications, bitcoin's attractiveness is bolstered by various factors, including investments in ETFs and corporate interest in cryptocurrencies.

MicroStrategy continued its bitcoin acquisition, and Reddit reported modest investments in bitcoin and ether. Additionally, the issuance of dollar-pegged stablecoins by Tether surpassed $100 billion.

Ether, the second-largest cryptocurrency, trades below its record peak, with market positioning in bitcoin appearing robust. Cryptocurrency stocks experienced a downturn on Tuesday, with declines observed in companies like Coinbase, Riot Platforms, and Marathon Digital.

While bitcoin price might not be as stable, there is no doubt that those who invested a while ago could be enjoying the fruit of their decision.