SINGAPORE - Bitcoin surged to a record for the first time in more than two years, before rapidly retreating as traders took some profits.
The largest digital asset topped out at US$69,191.95 on March 5 in the United States but the ensuing sell-off left some of the crypto faithful’s champagne on ice, sending Bitcoin to US$67,544 as at 4.35pm on March 6 in Singapore.
The price swings underscore Bitcoin’s boom-or-bust nature. Inflows into US-spot Bitcoin exchange-traded funds (ETFs), a looming reduction in the token’s supply growth and speculative derivatives bets fuelled an eye-catching rally in 2024 – leaving investor positioning stretched and hinting at the risk of a retrenchment.
“I expect we’ll likely see some range-trading take place for a few days at least, with Bitcoin prices continuing to chop around in the US$60,000 range,” said OSL SG head of trading Stefan von Haenisch in Singapore.
Coinglass data showed that about US$880 million (S$1.18 billion) worth of bullish crypto wagers and US$265 million of bearish bets were liquidated in the past 24 hours in derivatives markets – the combined daily figure of more than US$1 billion is the highest since the pandemic-era bull run in digital assets, according to Mr von Haenisch.
Even with the latest dip, Bitcoin’s 50 per cent advance so far in 2024 outstrips global stocks, supporting optimism across the digital-asset market. A gauge of the largest 100 crypto tokens is up more than 40 per cent over the same period.
The US Securities and Exchange Commission permitted spot-Bitcoin ETFs in January, after its effort to resist them suffered a legal defeat in 2023.
The move has widened the mass-market accessibility of Bitcoin, helping the crypto sector to turn the page following a bear market in 2022 and a string of subsequent bankruptcies, including the implosion of Sam Bankman-Fried’s FTX exchange. The industry used the term “crypto winter” to describe the turmoil.
ETF inflows
A steady tide of money has poured into the ETFs issued by heavyweights including BlackRock and Fidelity Investments. The net inflow of about US$8 billion is colliding with a looming slowdown in Bitcoin’s supply growth, the so-called halving due in April. One question now is whether the cohort of ETF investors will be unsettled by the latest price gyrations.
“ETFs brought in a diverse investor base, and inflows have been healthy,” said blockchain adviser Venn Link Partners founder Cici Lu McCalman. “Inelastic supply will continue to be solid support for Bitcoin’s scarcity value.”
Bitcoin’s comeback started in early 2023 and has helped to lift the overall market value of digital assets to about US$2.5 trillion. The token’s previous peak was US$68,991.85 in November 2021, according to data compiled by Bloomberg, a period when monetary and fiscal stimulus was oiling global markets.
“Many traders may have held onto their long positions through the depths of the crypto winter, and are now finally seeing an opportunity to exit at a profit,” said digital-asset derivatives liquidity provider Orbit Markets co-founder Caroline Mauron. “It is not clear how quickly this can be absorbed by new retail and institutional interest, but we do expect the all-time high and levels further up to be re-tested shortly.” BLOOMBERG
