By Amanda Cooper and Alun John
LONDON (Reuters) – Bitcoin rose 5% on Friday to its highest level in a month, fueled by what analysts called a wave of buying ahead of April’s halving and a slowdown in recent outflows of exchange-traded funds.
The price hit a high of $47,705, the highest since January, after the first U.S.-listed bitcoin spot exchange-traded products received regulatory approval.
The world’s largest cryptocurrency rose 3.5% to $46,946, up 10% this week, the highest in a week since October. Ether rose 2.5% to $2,486.
Bitcoin hit a two-year high just above $49,000 in January but has since trended lower, pressured by a wave of profit-taking to “sell the news” after the Securities and Exchange Commission Exchange Commission ultimately approved the ETFs.
Bitcoin’s decline has gone against the grain of other financial markets in recent weeks, as stocks, bonds and gold have all rallied on expectations that global central banks would shift to lower rates. interest rate this spring.
Policymakers have since pushed back against this and economic data does not support the idea that rates are likely to fall any time soon, but risk assets like stocks have been rising, with Bitcoin resuming its upward march.
Friday’s price rise would be a function of a slowdown in recent ETF outflows and a wave of buying ahead of April’s halving, analysts said.
“With bitcoin returning to $46,000 this morning, traders are clearly preparing for the highly anticipated halving event expected in about two months,” said Joshua Mahony, chief markets analyst at Scope Markets.
The next halving is expected in April, a process aimed at slowing the release of bitcoin, whose supply is capped at 21 million – of which 19 million have already been mined – by halving the reward for producing the tokens.
“If historical trends hold, traders hope to see a bumper 2024 given the previous trend of outperformance after a halving,” Mahony said.
Bitcoin prices have generally increased after a halving. Six months after the first halving in 2012, the price rose from $12 to $126. After the second halving in 2016, it rose from $654 to $1,000 in seven months and in 2020, it rose from $8,570 to $18,040 in the same period.
Additionally, according to Markus Thielen, founder of digital asset research firm 10x Research, bitcoin also tends to perform during U.S. election years, coinciding with the halving cycles in 2012, 2016 and 2020. .
QCP Capital said in a note Thursday that some ETF outflows had eased, particularly from the Grayscale Bitcoin ETF, the largest by assets, which supports crypto spot prices.
“Total inflows into all BTC ETFs are now positive,” QCP said.
When the SEC approved the ETFs for listing in January, Grayscale, whose existing Bitcoin trust had been converted into an ETF at the time, lost $2.7 billion in outflows in the first week afterward as early investors fled. are rushing to book profits, according to data from LSEG Lipper.
Outflows slowed the following week to $1.5 billion, and slowed to $701 million in the week ended February 7.
Scope Markets’ Mahony noted that the recent rise in the dollar has held crypto back lately, but that the effect was likely to fade.
(Additional reporting by Medha Singh in Bangalore; editing by Harry Robertson and Alison Williams)