The global digital asset industry recorded a brief market surge on Tuesday morning as Bitcoin (BTC) managed to regain the $43k price level. The cumulative market cap surged by over 2% in the last 24 hours to stand at $1.66 trillion. However, this surge came in after Bitcoin price dropped to $38k.
Bitcoin whales in action
According to the data, the recent market correction saw Bitcoin whales showing confidence by accumulating more BTC. Approximately 67 new entities now hold 1,000 BTC or more. This marks a 4.50% increase in just two weeks.
With the recent surge, Bitcoin is poised to achieve its fifth consecutive monthly gain. This would be the longest winning streak since the pandemic-era rally. Bitcoin price has risen about 3% in January. It is backed by the launch of the first US spot Bitcoin exchange-traded funds (ETFs) and changing views on monetary policy.
If Bitcoin gets these five straight monthly gains, it would be the longest since the six months from October 2020 to March 2021. BTC saw a record high of nearly $69,000 in November 2021.
ETF impact
The launch of spot ETFs by giants like BlackRock Inc. and Fidelity Investments has been a major factor in the recent market dynamics. Bitcoin recorded a surge of almost 160% in the previous year in anticipation that ETFs would attract new investors. However, after the funds went live, Bitcoin faced a 12-day drop of about 21%.
The $21 billion Grayscale Bitcoin Trust (GBTC) was converted into an ETF on January 11. Investors initially withdrew money from the fund after the change, but the pace of withdrawals has slowed, contributing to Bitcoin’s recovery.
The slowdown in outflows from the Grayscale fund is seen as a positive development for market sentiment, according to Sean Farrell, Head of Digital-Asset Strategy at Fundstrat Global Advisors LLC.
The 10 ETFs have attracted a net $1 billion so far, making it the most successful ETF launch in history based on both trading and flow metrics. Investors are now eagerly awaiting the Federal Reserve interest-rate decision, with roughly even odds assigned to the prospect of a rate cut in March.
The correlation between the prices of luxury watches and Bitcoin, which was positive before the optimism surrounding spot ETFs, has been discussed. Both assets experienced a surge during the Covid years, driven by substantial injections of easy and cheap money into the economy by central banks and governments. However, in the third and fourth quarters of 2023, their prices diverged as excitement around a Bitcoin ETF influenced the crypto market, leading to a higher valuation of digital assets.
