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Bitcoin hits record above $72,000 as demand frenzy intensifies

Published 03/11/2024, 03:23 AM
Updated 03/11/2024, 04:52 PM
© Reuters. Representations of cryptocurrency Bitcoin are seen in this illustration picture taken in Paris, France, March 9, 2024. REUTERS/Benoit Tessier/Illustration/file photo
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By Hannah Lang, Amanda Cooper and Harry Robertson

WASHINGTON/LONDON (Reuters) -Bitcoin hit a record high on Monday above $72,000, as the biggest cryptocurrency's surge showed no signs of slowing down.

Bitcoin was last up 4.4% at $72,649 after reaching as high as $72,739.

The world's most valuable cryptocurrency has been boosted by a flood of cash into new spot bitcoin exchange-traded funds and hopes that the Federal Reserve will soon cut interest rates.

"The recent surge in Bitcoin's value ... underscores the remarkable strength and resilience of the leading cryptocurrency. This achievement not only marks a significant milestone but also reflects the continued confidence and demand in the market," Bitfinex analysts said in a research note.

Flows of capital into the 10 largest U.S. spot bitcoin exchange-traded funds slowed to a two-week low in the week to March 8, but still reached almost $2 billion, LSEG data showed.

"Bitcoin has started the week with a surge, dragging the rest of the cryptocurrency space higher with it," DailyFX strategist Nick Cawley said.

Supply of bitcoin, which is limited to 21 million tokens, is set to get tighter in April, when the so-called "halving" event takes place.

Every four years, the rate at which new supply is released into circulation, as well as the reward for crypto miners, is halved, which tends to support the price.

Since bitcoin has less than two decades as a financial asset, predicting its price trajectory remains extremely challenging. Just months after retail exuberance helped drive bitcoin to its previous record in November 2021 the cryptocurrency crashed, taking half the crypto industry with it.

Britain's financial watchdog on Monday became the latest regulator to pave the way for digital asset trading products after saying on Monday it will now permit recognized investment exchanges to launch crypto-backed exchange-traded notes.

The UK regulator said these products would be only available for professional investors such as investment firms and credit institutions authorised to operate in financial markets, the Financial Conduct Authority (FCA) said in a statement.

The FCA warned that crypto exchange traded notes (ETNs) - bonds issued by financial institutions that track the performance of underlying assets - could harm retail investors.

Nonetheless, demand is picking up across the investment community.

Asset managers now hold the biggest bullish position in bitcoin futures on record, weekly data from the U.S. Commodity Futures Trading Commission showed.

In the week to March 5, the net long position held by asset managers - usually interpreted as covering holdings of institutional investors such as mutual funds and pension funds - rose to 15,531 lots, worth $5.5 billion based on the current bitcoin price.

© Reuters. Representations of cryptocurrency Bitcoin are seen in this illustration picture taken in Paris, France, March 9, 2024. REUTERS/Benoit Tessier/Illustration/file photo

Ether rose 3.97% to $4,062.07, around its highest for two years. Speculation that U.S. regulators may approve the listing of spot ether ETFs this year has driven the price up 75% this year.

In crypto stocks, shares of Coinbase (NASDAQ:COIN) rose 2.8%, while crypto miners Riot Platforms (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA) fell 2.2% and 6.1%, respectively.

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