- Bitcoin’s price surpassed $69,000 for the first time in almost three years
- Rising institutional demand and retail returns were the reason for the increase
Maybe you didn’t expect it, but it happened. Bitcoin [BTC] reached $69,000 again and has officially surpassed its previous all-time high (ATH) on exchanges like Bitstamp and Coinbase. The last time BTC reached this level was in November 2021, meaning it took about two years and three months to regain the price.
Source: BTC/USDTrading view
That said, at the time of writing, BTC was on a retracement, with the crypto valuing at just over $67,000 on the charts.
The increase to $69,000 didn’t just happen without some underlying factors. According to AMBCrypto’s market analysis, both macro factors and on-chain metrics contributed to this milestone.
Demand turns green for BTC
Outside of the on-chain region, spot ETFs have contributed significantly to investors’ resurgent confidence in Bitcoin. For context, Bitcoin ETFs offer investors the opportunity to have exposure to the coin without necessarily owning BTC.
On January 11, the US SEC approved the ETFs to which some asset managers had registered. At that time, the price of Bitcoin was approximately $44,000.
Hours after the announcement, the value of the coin rose to $49,000. Within a short time the price plummeted. Many market participants at the time called the ETF approval a “sell the news” event. However, they did not know that the drop was a “necessary measure” for BTC to accelerate its rise. As I write this, the volume of money flowing into spot ETFs is moving at a record pace.
On several occasions, AMBCrypto reported how the daily volume reached high values. However, the pace hasn’t slowed based on a recent revelation by Senior Bloomberg analyst Eric Balchunas. Balchunas reported that the ETFs’ total daily volume was $5.5 billion.
Source:
Everyone who bought has left the red
This was the second highest volume since January at Blackrock [IBIT] extract as much as $2.4 billion. The figure here suggests that interest in ETFs has remained largely positive. From an on-chain perspective, we can do that with the Realized Cap as well. At the time of writing: Bitcoins Completed hood amounted to $457 billion. This value was almost the same when the coin reached $69,000 in November 2021.
But why is this metric important in every cycle? Well, the reason is not far-fetched. Simply put, the Realized Cap provides a historical view of Bitcoin price movements. It reflects a more accurate representation of the market by looking at the cost of acquisition compared to the last time it traded.
This history-based approach makes it different from market cap. Therefore, at the time of writing, the realized cap seemed to imply that almost 100% of investors paid a lower purchase price than they are currently worth.
Source: Glassnode
However, BTC’s return journey to its ATH was not without challenges. Throughout most of 2022, the broader crypto market experienced challenging periods. For those uninitiated at the time, the total crypto market cap lost $2 trillion from its 2021 peak.
The terrible crypto winter led to doubts about Bitcoin
This nosedive can be associated with many unfortunate events. To start with Terra Luna [LUNA], a promising project that was described by much of the market as the ‘future of money’, collapsed. This happened in May 2022. Not only LUNA crashed, but also the stablecoin Terra USD [USTC] also lost its peg to the dollar.
Around that time, investors lost about $60 billion on the market when the price of Bitcoin plummeted to $31,000. However, the attack did not stop as other incidents devastated investor confidence.
Companies such as Three Arrows Capital (3AC), Celsius and Voyager Digital could no longer afford their operations and chose to go bankrupt. However, the nail in the coffin came in November of the same year. This time, FTX, led by Sam Bankman-Fried, collapsed.
After it was revealed that FTX had been improperly using customers’ funds, BTC crashed below $16,000. Fast forward to 2023, the coin redeemed itself and ended the year above $43,000.
Price predictions target six figures
Now that all of this is behind Bitcoin, it looks like the coin will hit a new ATH. One metric that is in line with this prediction is the stock-to-flow ratio. This metric measures the annual flow of new coins. If the stock-to-flow ratio is low, it means that Bitcoin’s scarcity has decreased.
At the time of writing, Bitcoin’s stock-to-flow ratio was climbed significant, indicating greater scarcity. The higher the scarcity, the greater the chance of value increase. Like the aforementioned ratio, the weighted sentiment stood at 2.62 at the time of writing.
Source: Santiment
As a measure of perception, the reading here suggests that many market players are bullish on BTC. Sentiment could turn into action and boost demand for the coin.
Read Bitcoin’s [BTC] Price forecast 2024-2025
In the meantime, some major market players have also done so predicted how far Bitcoin could go. One of them is William Quigley, co-founder of Tether. Speaking to CNBC, Quigley noted that the market is in better shape now. He said,
“The ETFs surprised me. I was a bit skeptical about it. But the inflow of 740,000 BTC was astonishing. This rally may be the largest we have ever seen. If we consider history, this would indicate that Bitcoin would reach $300,000 at the peak of the next bull market.”