Bitcoin continued an impressive rally to smash the US$57,000 barrier for the first time since late 2021 and ultimately reach a two-year high on Tuesday.
Come Tuesday afternoon, the cryptocurrency had gained 4.9% to sit at US$57,098, having climbed as high as US$57,425 earlier on.
Fuelled by growing inflows into spot Bitcoin exchange-traded funds, investments by large companies and an impending Bitcoin halving in April, gains since the weekend topped 10%.
Such ETFs were approved in mid-January by the US Securities and Exchange Commission and have subsequently prompted “relentless” demand, as per Justin d'Anethan, partnership head at digital asset market maker Keyrock.
“Since launch, the bitcoin spot ETFs have amassed holdings that represent over 3% of all bitcoin currently in existence,” eToro analyst Simon Peters explained.
“This milestone highlights a growing trend of institutional investors wanting to get exposure to Bitcoin.”
Indeed, MicroStrategy is among large firms to have recently upped Bitcoin holdings since, with the company unveiling a US$155 million purchase of around 3,000 coins on Monday.
Reddit, which is gearing up for a New York listing, also recently disclosed investments in the cryptocurrency using its spare cash.
Further fuelling interest is the latest Bitcoin halving, which comes around every four years in a bid to limit the supply of the tokens by slashing rewards for producing them by half.
This is part of a wider cap on the supply of Bitcoin at 21 million tokens, of which 19 million have already been mined.
Peters added the recent gains could just be the beginning meanwhile, as ETFs and institutional investors continue vying for the limited supply of Bitcoin, potentially pushing the digital assets to a “new all-time high in the coming weeks”.