Bitcoin tops 50k as ETF interest surges, traders eye April’s halving event

The Bitcoin ETF launches last month were, by all accounts, a bit of a disappointment. Instead of turbo-charging the price of Bitcoin and other high-market-share cryptocurrencies, the SEC’s approval of 11 Bitcoin ETFs on January 11^th, 2024, seemed to have the opposite effect.

Analysts argued that the SEC’s move was already priced in and pointed to the autumnal Bitcoin bull run that saw its price rise from $26,000 in September to $47,000 in January. Many retail traders were still caught off-guard though, and the post-approval slump in price to below $40,000 stirred the anxiety still present in the crypto community after a traumatic couple of years. 

But February has been a very different story. Since the beginning of the month, the BTC/USD has surged, smashing through the psychologically important 50k barrier to hold steady around the 53,000 mark.

“Following a disappointing launch of several bitcoin ETFs we’re now seeing continued inflows into newly issued funds, and I think we’re seeing much more organic demand for bitcoin as a result,” said James Butterfill, head of research at crypto investment group CoinShares.

According to data shared by CoinShares, the newly approved bitcoin ETFs have pulled in roughly $3bn in net flows since their launch. This increased interest from institutional investors has spurred on retail traders, already optimistic that lower interest rates in 2024 will increase interest in higher-risk assets.

Retail traders also have one eye on the Bitcoin halving event in mid-April. Bitcoin halving is an event that occurs approximately every 4 years, or after 210,000 blocks have been mined, and reduces the number of Bitcoins mined per block by 50%. Halving is hardwired into the Bitcoin system to ensure scarcity and the mid-April halving event will drop the block reward from 6.25 Bitcoin to 3.125.

Bitcoin halving has historically led to surges in price. The first halving event in 2012 was followed by an extraordinary bull run, seeing Bitcoin prices rise from $13 to over $1100 the following year. The May 2020 halving event saw the BTC/USD rise from $9,000 to its all-time peak of $69,000 in November 2021.

Despite the current wave of optimism, the catastrophic collapse in Bitcoin price over 2022 was an extreme reality check for Bitcoin bulls and has left many traders both penniless and paranoid. Some analysts are wary of the recent price surge and point to the inescapable disadvantages of crypto, namely the lack of any fundamental price support.  

“The price of bitcoin will always fluctuate violently based on the number of true believers that want to buy, and the number of sceptics that want to sell,” said Jim Angel from Georgetown McDonough’s Psaros Center for Financial Markets and Policy. “If you monitor chatter about bitcoin’s value, online almost all of it is short-term technical analysis and there are almost no points made about its fundamental value”.

So, while optimism abounds and the concerns over scandal and fraud are fading, traders need to be aware that cryptocurrencies are extremely volatile and are almost completely reliant on trader sentiment for price changes. If you are considering trading Bitcoin, or any other cryptocurrency, avoid over-leveraging and make sure your risk management strategy is ironclad.

Technicals

Having crossed the 50,000 USD/BTC psychological handle on Wednesday, Bitcoin continued soaring higher and sits at around the 53,300 USD level. With the halving event strongly in focus, and little in the way of resistance, many believe that Bitcoin will soon reach its all-time-high around the 69,000 USD mark. 

From a purely technical standpoint, the cryptocurrency’s price is miles above all moving averages (the 20,50,100, and 200-day EMAs), while the MACD shows high upward volume, with no signs of slowing, highlighting the strong momentum. The RSI, on the other hand, sits at around 81, suggesting that Bitcoin is in overbought territory and may be due for a pullback soon.