The cryptocurrency market continues to sizzle as Bitcoin achieves yet another milestone, surging beyond $72,700 on Monday. Initially catalyzed by the green light given to spot bitcoin ETFs, this upward trajectory is further propelled by anticipation surrounding an upcoming “halving” event, set to restrict the influx of new supply from bitcoin miners.
In the past week alone, Bitcoin has recorded a remarkable 9.5% surge, marking a staggering 50% increase for the month, as per CoinMarketCap data. The cumulative market capitalization of cryptocurrencies has also surged by 10% over the week, reaching $2.71 trillion, with Bitcoin comprising 52.7% of this valuation.
While the current bullish fervor surrounding Bitcoin appears boundless, there are signals suggesting a potential peak. The CoinMarketCap Crypto Fear & Greed Index now stands at an elevated 89.12 points, a significant climb from the “neutral” territory at 59.3 points recorded in early February. This index gauges market sentiment on a scale of 0 to 100, with extremes indicating potential market corrections.
Despite looming caution, Bitcoin remains the focal point for both retail and institutional investors, witnessing substantial inflows totaling $2.6 billion for the week and $9.9 billion year-to-date, as reported by CoinShares’ Digital Asset Fund Flows Weekly Report. Conversely, Ether, the second-largest cryptocurrency, has seen muted enthusiasm, with weekly inflows down by $2.1 million, albeit retaining a solid year-to-date increase of $135 million.
As anticipation builds towards the upcoming bitcoin halving event slated for mid-April—an occurrence that recurs every four years—investors are eager to see how high the cryptocurrency’s value will soar. Yet, it’s crucial to acknowledge the cyclic nature of market movements; what ascends may inevitably descend once more. Historically, bitcoin halvings have ignited heightened demand and subsequent price surges.
The most recent bitcoin halving, occurring on May 11, 2020, witnessed an impressive surge in value, catapulting the cryptocurrency’s price by approximately 600% from around $9,000 to $63,000 by April 2021. However, this surge was met with a subsequent decline of roughly 50% within a mere three months, underscoring the inherent volatility associated with the asset.
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