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Bitcoin Rises, Fueled by ETF Flows and Halving Anticipation
Bitcoin experienced a notable recovery on Monday, regaining some of the losses incurred last week, as steady capital inflows into exchange-traded funds (ETFs) and anticipation of the upcoming “halving” event boosted the sentiment surrounding the world’s largest cryptocurrency.
Bitcoin surged by 4.9% to reach $67,462.8 by 01:46 ET (05:46 GMT), though it remained approximately $6000 below its recent record high set earlier in March. Last week, Bitcoin faced a decline from its all-time highs, dropping to as low as $60,000 as traders sought to secure profits following a period of rapid ascent.
However, the cryptocurrency swiftly rebounded from these lows, with strong capital inflows into recently-approved spot exchange-traded funds contributing to the recovery. Despite this positive momentum, continuous outflows from Grayscale Bitcoin Trust (NYSE:GBTC) exerted some downward pressure on Bitcoin’s spot prices.
Anticipation of Halving Event
Moreover, anticipation surrounding the forthcoming “halving” event fueled optimism among investors. The halving event, expected to occur around April with the generation of the 740,000 block, will result in a 50% reduction in the Bitcoin network’s creation of new tokens, thereby tightening the supply. Although the exact timing of the event remains uncertain, market participants remain bullish on Bitcoin’s prospects.
However, Bitcoin’s recovery was somewhat tempered by the strength of the US dollar. The greenback surged to a one-month high on Monday, supported by dovish signals from major global central banks, prompting investors to favor the dollar as a high-yielding, low-risk currency.
Moreover, anticipation surrounding key economic data, particularly the US Personal Consumption Expenditures (PCE) data—considered the Federal Reserve’s preferred inflation gauge—kept the dollar buoyant. This data, scheduled for release on Friday, is expected to provide further insights into the Fed’s future monetary policy decisions.
Fed Signals and Market Outlook
Throughout the week, several Fed officials are set to speak, offering additional cues on the central bank’s interest rate trajectory in 2024. Last week’s Fed meeting indicated that the central bank still anticipates implementing 75 basis points worth of interest rate cuts this year, adding to the cautious sentiment surrounding Bitcoin’s recovery.
