Bitcoin surges 5% to one-month highs as ETF outflows ease ahead of halving event

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10th February 2024 – (New York) Bitcoin experienced a notable 5% price surge on Friday, reaching one-month highs. Analysts attributed this increase to a flurry of buying ahead of the upcoming halving event in April, as well as a decrease in outflows from exchange-traded funds (ETFs).

The price of Bitcoin reached a session peak of $47,705, the highest level since January, following regulatory approval for the first U.S.-listed spot bitcoin exchange-traded products. As of now, the world’s largest cryptocurrency is up 3.5% at $46,946, poised for a weekly gain of 10%, the most since October. Ether, another popular cryptocurrency, also saw a 2.5% rise to $2,486.

Although Bitcoin reached a two-year high above $49,000 in January, it experienced a downward trend due to profit-taking triggered by the Securities and Exchange Commission’s approval of ETFs. However, Bitcoin’s recent drop contradicted the upward movement seen in other financial markets, such as stocks, bonds, and gold, which rallied amid expectations of global central banks cutting interest rates this spring.

Despite policymakers pushing back against rate cuts and economic data not supporting the notion of immediate rate reductions, risk assets like stocks have continued to rise. Bitcoin, in particular, has resumed its upward trajectory.

Analysts believe that the recent surge in Bitcoin’s price is a result of decreased ETF outflows and increased buying activity in anticipation of the halving event in April. Joshua Mahony, Chief Markets Analyst at Scope Markets, stated, “With bitcoin back up to $46,000 this morning, traders are clearly gearing up for the hotly anticipated halving event due in roughly two months.” The halving process is designed to slow the release of bitcoin by cutting the reward for producing tokens in half. This event has historically led to price rallies, and traders hope for a similar outcome in 2024.

Bitcoin has traditionally performed well following halving events. After the first halving in 2012, the price surged from $12 to $126 within six months. Similarly, following the second halving in 2016, the price increased from $654 to $1,000 in seven months. In 2020, Bitcoin’s price rose from $8,570 to $18,040 in the same time period.

In addition, Markus Thielen, the founder of digital asset research firm 10x Research, noted that bitcoin tends to perform strongly during U.S. election years, which aligns with the halving cycles observed in 2012, 2016, and 2020.

QCP Capital reported that ETF outflows had eased, particularly from the Grayscale Bitcoin ETF, the largest in terms of assets, which supports spot crypto prices. According to QCP, “Total inflows across all BTC ETFs are now positive.” When the SEC approved the listing of ETFs in January, Grayscale faced significant outflows, with $2.7 billion leaving the fund in the first week. However, outflows decreased to $1.5 billion in the following week and further slowed to $701 million in the week ending 7th February.