Bitcoin (COIN: $BTC) Tops $63K, Coinbase Outage Triggers Pullback

Bitcoin (COIN: $BTC), the world’s largest coin by market cap, momentarily topped $63K for the first time in three years on Wednesday, February 28, 2024. The $63K mark was a major achievement, as it was just shy of Bitcoin’s last peak of $68,789 during the November 2021 Bull Run.

Coinbase Outage Triggers Pullback

After topping $63K, Bitcoin fell back to around $61K on Wednesday after users reported outages on Coinbase. The Coinbase (COIN) exchange experienced glitches, including incorrectly displaying zero balances for users.

Bitcoin Maintains Momentum

Since the launch of Bitcoin ETFs in January 2024, institutional inflows have been rising, sending Bitcoin past $1,000 milestones every few days.

For the whole of this this week, Bitcoin has been on a roll, hitting new record highs for 2024. The week’s rally coincided with increased inflows in Bitcoin spot ETFs, with the funds adding 12,000 BTC on Tuesday, February 27, after adding 10,000 BTC the previous day.

The rally comes just weeks before the Bitcoin halving event, which occurs every four years and often sees Bitcoin reach new all-time highs.

Bitcoin has been rallying since the tail end of 2023. However, the momentum has picked up in the past few days. At the start of this week, Bitcoin was worth $51,730.54. It has since gained around 21.12% to its current $63,190.43 per coin price.

Bitcoin Spot ETFs Could Trigger Supply Squeeze

Less than two months after the SEC approved Bitcoin ETFs, these funds now control over 300,00 BTC in assets under management, excluding the Grayscale GBTC fund.

According to a tweet by Vetle Lunde, a senior analyst at K33 Research, the spot ETFs held 303,002 BTC as of the close of trading on Monday, February 26, 2024, worth around $17 billion.

As of Thursday, February 29, he tweeted that the figure now stood at 768,280 BTC, with BlackRock now holding over 150K BTC, while Fidelity now holds over 100K BTC.

Those ETFs now hold around 3.6% of the total supply of 21 million BTC, more than MicroStrategy’s 193,000 BTC and more than ten times that held by Tether. The ETFs now have more BTC than all public BTC miners.

Some industry analysts now believe the massive inflows into Bitcoin spot ETFs could trigger a supply squeeze. Newly minted coins are unable to keep up with demand. In the past six months, nearly 80 percent of the Bitcoin circulating supply has not changed hands.

 Once the halving occurs, the number of coins minted daily will fall from 900 to 450. If the existing supply and demand metrics hold, the price could reach new all-time highs.

Bitcoin Rallies In The Face of High Interest Rates

Some analysts had been predicting that a drop in central rates would spur the next Bitcoin rally. However, those hopes were dashed when the Fed announced it would hold rates.

Despite the high interest rates, Bitcoin has continued to rally, outperforming traditional assets like gold in 2024. If the Fed were to drop rates after the halving event, it would add extra momentum to Bitcoin. One Bitcoin is currently valued at $63,190.43.

Year-to-date, it has gained 42.87%, and 15.73% since Monday, February 26, 2024. The trading volume has more than doubled from around $34 billion at the start of the week to around $87 billion as of February 29, 2024.

Impact of BTC Rally on Stocks

Cinbase (COIN) closed trading on Wednesday, February 28, 2024, relatively flat after the exchange experienced glitches during the initial BTC surge past $63K.

Meanwhile, Marathon Digital (MARA) has seen its stock rise 35% since the start of 2024, while MicroStrategy (MSTR) has experienced a 40% surge in the same period.

Derivatives have also seen a surge in interest, with around $25 billion worth of open contracts in the BTC futures market, according to Coinglass. It marks a new high for BTC futures bets, surpassing the last high set in April 2021.

According to analyst Christopher Newhouse of Cumberland Labs, the current activities in the options market send a clear bullish signal.

Should You Buy Bitcoin?

Bitcoin (BTC) has had to overcome a lot of criticism over the years. Since January 2009, Bitcoin has moved from being a fringe idea to one that gained regulatory acceptance worldwide. The criticism has increased even as the price has risen by over 12,000% in the past decade.

With spot Bitcoin ETFs pushing BTC to new highs and the upcoming BTC halving, the leading crypto coin by market cap looks set to achieve a new ATH above $70K. Consequently, despite the current high of nearly $63K, there is still upside potential.

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