Bitcoin Rally Highlights Halving Supply Shortage and Spot ETF Inflow

Bitcoin’s price has surged to a new high of $49,940 on February 12, reaching levels not seen since December 2021. This rally of 3.4% came after a period of positive post-exchange-traded funds (ETFs) performance the previous week. In the past seven days alone, Bitcoin had gained 16%. The increase in Bitcoin’s price can be attributed to the rising inflows into spot Bitcoin ETFs, which attracted over $1.1 billion in netflows. This surge brings the total assets under management for Bitcoin ETFs to $59 billion, the highest since early 2022.

The recent increase in Bitcoin’s price is significant because it brings the cryptocurrency above $49,000 for the first time in over two years. The last time Bitcoin reached this level was on December 28, 2021, when it peaked at $50,720. It later experienced a sharp drop, reaching a low of $15,522 on November 9, 2022, following the FTX incident. Despite this volatility, independent trader and analyst Rekt Capital noted that the signs were there for Bitcoin’s rise above $49,000.

The sudden surge in Bitcoin’s price has also resulted in a spike in liquidations in the crypto market. Over $152 million worth of liquidations have been recorded so far, with the number still increasing. Bitcoin short positions were liquidated, totaling more than $45.56 million. These liquidations indicate the high levels of activity and volatility within the cryptocurrency market.

It’s worth noting that the increased inflows into spot Bitcoin ETFs have contributed to Bitcoin’s positive performance. Last week alone, these ETFs saw a net inflow of $1.1 billion, bringing the total inflows since their launch on January 11 to $2.8 billion. This trend suggests growing investor interest in Bitcoin and a shift away from the Grayscale Bitcoin Trust (GBTC), which has been experiencing outflows.

The recent surge in Bitcoin’s price to a new high of almost $50,000 is a significant milestone for the cryptocurrency. It indicates a period of positive performance, driven by increased inflows into spot Bitcoin ETFs. The spike in liquidations also highlights the volatility and inherent risks associated with the crypto market. Investors should exercise caution and closely monitor market trends when considering investing in Bitcoin or other cryptocurrencies.