What’s driving up Bitcoin’s price?

Bitcoin is back up!  The crypto bulls are running and Bitcoin is nearing its all time high!

Bitcoin investors are probably feeling good after the cryptocurrency once again broke through the US$60,000 mark.

Bitcoin is up 47% since the start of the year, trading at just over US$65,000 as I’m recording on March 4. Yup, that means one bitcoin costs over US$65,000. 

That’s crazy especially when you consider that bitcoin prices fell to around US$16,000 during crypto winter last year, after peaking at almost US$68,000 in 2021.

So what’s causing this latest rally?

Well, it’s several things working together. For starters, the launch of Bitcoin ETFs made the cryptocurrency more accessible to investors.

ETF is short for Exchange-Traded Fund.  Think of it as a basket. It has a bunch of different securities like stocks, bonds, and even gold, all in one. It gives investors exposure to various securities without having to buy each individual thing.  You just buy the whole basket and whatever’s in it.

So Bitcoin ETFs give investors exposure to the cryptocurrency with less risk. A Spot Bitcoin ETF gives ordinary investors exposure to the price moves of Bitcoin in their regular brokerage accounts. 

The United States recently gave the green light to several Bitcoin ETFs, so the price has steadily been on the rise.

Now last week, Spot Bitcoin ETFs had record daily inflows.  But at the same time, the amount of Bitcoin held on centralised exchanges fell to a new low. 

So essentially, the demand for Bitcoin, due mostly because of the new ETFs, is more than the supply of the cryptocurrency available in the market. And we know how the rules of supply and demand go. 

Great demand with limited supply means higher prices. Cue Bitcoin’s latest rally.

And some analysts are expecting Bitcoin to set a new record this year because another halving event is coming up.

Bitcoin halving is an event that is written into the Bitcoin code. It cuts the amount of Bitcoin that can be mined in half. I have a whole video dedicated to Bitcoin halving that you can check out. 

The next halving is expected to take place next month – April 2024. 

So this will limit the supply even further. 

And that’s the bottom line.