Bitcoin (BTC) soared to a fresh 2024 peak of £53,019 on February 20, only to sharply decline to £50,000 on select exchanges.
Traders attribute consistent inflows of spot BTC ETFs and the forthcoming supply halving event as pivotal drivers behind this surge, with BTC currently trading above £52,100 at the time of writing.
Let’s delve into the primary factors underpinning today’s volatility in the Bitcoin price.
Bitcoin futures’ open interest (OI) has surged to a new yearly pinnacle, reminiscent of levels last witnessed in November 2021.
This surge suggests heightened trading activity surrounding the foremost cryptocurrency by market capitalisation.
Data from cryptocurrency futures trading and information platform Coinglass reveals that total OI for BTC futures reached £22.69 billion on February 20, the highest since November 11, 2021, closely approaching the peak of £23 billion recorded at that time.
Bitcoin futures OI surged by over 30% in 2023, correlating with Bitcoin’s 23% year-to-date surge to £53,000, reaching levels last observed in December 2021.
Open interest serves as a gauge of the overall value of all unsettled Bitcoin futures contracts across exchanges, with an uptick indicating increased market activity and trader sentiment surrounding the pioneering cryptocurrency.
Investor sentiment remains buoyant, buoyed by rising inflows to spot BTC ETFs despite outflows from gold ETFs on the rise.
Bitcoin has surpassed the £49,000 peak reached subsequent to the January 10 approval of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission.
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Data from Farside Investors reveals that £4.91 billion has flooded into Bitcoin ETFs within six weeks since trading commenced on January 11.
The total weekly inflows into the newly issued spot Bitcoin ETFs reached £2.5 billion last week, as per CoinShares Digital Asset Fund Flows Weekly Report.
CoinShares analyst James Butterfill remarked, “These inflows, alongside recent positive price movements, have propelled total assets under management (AuM) to £67 billion, marking the highest level since December 2021.”
On February 17, financial commentator Tedtalks Macro underscored the steady rise in net inflow to spot Bitcoin ETFs, averaging £182 million per day, asserting,
“Post-halving we only need ~£25M of net inflows to spot ETFs per day, to offset the miner production.”
The impending Bitcoin halving, anticipated to slash miners’ rewards by 50%, is also projected to significantly stoke investors’ interest in BTC.
Historically, the halving event has preceded Bitcoin embarking on a parabolic uptrend in the months post-event.
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