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The month of February officially became a month of joy for Bitcoin (BTC) investors as the largest cryptocurrency rose to impressive levels, reaching the highest point in recent years at $64,000. Bitcoin closed the month at $62,216, marking a 45% increase over the monthly period. Thus, it demonstrated its strongest performance since December 2020.
Key Catalysts: Spot ETFs and Bitcoin Halving
According to recent data, Bitcoin exchange-traded funds (ETFs) achieved a notable success in February with a daily net entry record of $677 million. There were net entries exceeding $2 billion in various spot Bitcoin ETFs, and this is attributed to the need for additional BTC supply to support the creation of spot ETFs. Analysts point to Bitcoin’s supply and demand dynamics as a significant factor behind the notable gains in February.
Defiance ETFs CEO and Chief Investment Officer Sylvia Jablonski pointed to the launch of new spot ETFs and the upcoming Bitcoin block reward halving as catalysts for the price increase of Bitcoin.
According to data provided by CoinGlass, February has historically been a month where Bitcoin records strong performance. Over the last 12 years, Bitcoin ended February with gains in 10 of those years, providing an average return of 15.7% to its investors within the month.
Warnings from Wall Street Veteran Novogratz
Wall Street veteran and Galaxy Digital CEO Michael Novogratz warned that Bitcoin could experience corrections before reaching new record highs and advised caution.
Novogratz anticipates potential corrections down to the $50,000 level before a resurgence. He also warned about excessive leverage in the market and emphasized that the ongoing rally following the launch of spot Bitcoin ETFs is in a “price discovery” phase.
The CEO of Galaxy Digital added that while some investors may profit from the rally, others, particularly those from Generations Y and Z seeking high returns, could face significant losses. Novogratz underscored the need for caution given the current levels of leverage in the market.
