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Many investors, including analysts and experts, were anticipating a decline in the price of Bitcoin (BTC) in February. However, the largest cryptocurrency by market value, with a market cap of $1.22 trillion and a 24-hour trading volume of $55 billion, was trading at the $62,000 level.
Current State of Bitcoin ETFs
Since the Securities and Exchange Commission (SEC) greenlit Bitcoin ETFs in January, the total net inflow reached $7.49 billion by February 29, highlighting the intense interest from investors, especially institutional ones. According to SoSoValue, a company that tracks ETF performance, BlackRock’s IBIT ETF continues to be the best performing ETF, with a total net inflow of $603 million on Thursday.
On the other hand, Grayscale’s Bitcoin Trust has been struggling with continuous net daily outflows since its conversion to a GBTC ETF. This ETF saw a daily net outflow of $598 on Thursday, significantly reducing the total daily net inflow volume to $92.38 million. The increasing inflows into ETFs continue to alter Bitcoin’s supply and demand environment. Moreover, investors prefer to hold onto their BTCs in anticipation of a major breakout following the February halving event.
The Halving Process in Bitcoin
Halving not only grants Bitcoin its deflationary status but also significantly reduces the amount of new cryptocurrencies entering the ecosystem. Miner rewards will drop from the current 6.25 BTC to 3.125 BTC. This gradual reduction in supply, coupled with increasing or stable demand, is expected to drive Bitcoin’s price even higher in a parabolic trend. As demand increases, the ETF’s impact on BTC is also expected to be significant. The rise above $60,000 has significantly altered the technical outlook and strengthened it.
Bitcoin tested its highest levels at $64,000 but corrected on Wednesday to test the $60,000 support level. Supported by a sharp rise in FOMO, BTC stabilized above $62,000 on Friday. According to the Crypto Fear and Greed Index, investors are currently in extreme greed at 80, compared to 60 in the previous month.
