Bitcoin reaches $60,000 as the momentum of the 'Fear of Missing Out' (FOMO) surge intensifies.

February 28, 2024

Bitcoin reaches $60,000 as the momentum of the 'Fear of Missing Out' (FOMO) surge intensifies.

On February 28, Bitcoin surged to $60,000, reaching this milestone for the first time in over two years. The substantial influx of capital into new U.S. spot bitcoin exchange traded products contributed to a 42% price increase in February, marking its most significant monthly gain since December 2020. At the time of reporting, Bitcoin had risen by 6%, reaching $60,131, its highest level since November 2021, when it achieved a record just shy of $70,000. Furthermore, Bitcoin was on track for its most substantial week-on-week gain in a year, showing an 18.5% increase since February 21.

Investors have flocked to bitcoin in anticipation of the upcoming halving event in April, which is designed to decrease the cryptocurrency's release rate. Additionally, the possibility of the Federal Reserve implementing a series of interest rate cuts this year has fueled investor interest in assets that offer higher yields or greater volatility. Ben Laidler, a global markets strategist at the retail investment platform eToro, noted that Bitcoin's momentum is being fueled by continuous inflows into new spot ETFs, along with expectations for the halving event in April and the Federal Reserve's interest rate cuts in June.

The total worth of all circulating bitcoins surpassed $2 trillion this month, marking the first occurrence in two years, as reported by the cryptocurrency platform CoinGecko. Meanwhile, the token's price has doubled within a span of just four months. Notably, there has been a noticeable increase in interest in larger bitcoin exchange-traded funds (ETFs) this week, with heightened trading volumes observed in the three most popular ones operated by Grayscale, Fidelity, and BlackRock (IBIT.O).

On both Monday and Tuesday, approximately 110 million shares were exchanged in the three largest companies, representing about 51% of the total 215 million shares traded in the market's most valuable entities, including Apple (AAPL.O), Microsoft (MSFT.O), and Nvidia (NVDA.O), according to data from LSEG. Contrastingly, three weeks ago, this percentage was closer to 15%. Joseph Edwards, the Head of Research at Enigma Securities, attributes this surge to the ETF effect occurring ahead of schedule. He notes that there has been a swift and sustained increase in inflows into ETFs, suggesting that advisors are promptly promoting and selling these ETFs to clients.

According to LSEG data, the ten largest spot bitcoin ETFs attracted $420 million in flows on Tuesday alone, marking the highest amount in almost two weeks. Antoni Trenchev, the co-founder of Nexo crypto exchange, highlighted that if the current price of $60,000 per bitcoin isn't enticing enough, the fact that 70% of the bitcoin supply has remained stagnant for a year, coupled with major institutions like BlackRock and Fidelity acquiring the remaining supply, suggests favorable conditions for bitcoin. This comes at a time when miner rewards are about to be halved. Notably, MicroStrategy recently revealed its purchase of approximately 3,000 bitcoins for $155 million, and Reddit disclosed in a regulatory filing that it acquired small amounts of bitcoin and ether.

In the cryptocurrency market, the second-largest digital currency, ether, which supports the ethereum blockchain network, increased by 3.2% to $3,353, reaching another two-year high earlier in the day. With a 47% surge in February, this marks the most significant monthly gain since a 70% rally in July 2022. Some investors are optimistic that U.S. regulators will approve applications for ETFs based on spot ether.

Joseph Edwards from Enigma Securities noted that while the upward trend seems reasonably steady, there is a subtle element of FOMO (fear of missing out) in the current market sentiment.

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Bitcoin reaches $60,000 as the momentum of the 'Fear of Missing Out' (FOMO) surge intensifies.

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