©Reuters. FILE PHOTO: Physical representations of the bitcoin cryptocurrency are seen in this illustration taken October 24, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
By Hannah Lang and Amanda Cooper
WASHINGTON/LONDON (Reuters) -Bitcoin hit a two-year high on Tuesday, on track for its biggest two-day rally this year, on signs that big players are buying the cryptocurrency, while rival smaller Ether surpassed $3,200 for the first time since 2022. .
has rallied more than 10% in two sessions, helped by Monday’s disclosure by cryptocurrency investor and software firm MicroStrategy that it had recently purchased about 3,000 bitcoins for an outlay of $155 million.
The original and largest cryptocurrency by market value has also recently been boosted by the approval of Exchange Traded Funds (ETFs) that own bitcoin in the United States. Trading volumes in many funds surged on Monday and cryptocurrency-related companies also rallied, in contrast to broader, jittery markets.
Bitcoin rose 4.7% to $57,232, while Ether reached $3,290, its highest since April 2022.
“There is only so much supply … but the demand unleashed by US spot ETFs appears to be relentless,” said Justin d’Anethan, head of Asia partnerships at Keyrock, a digital asset market maker.
A major incentive right now is the bitcoin halving event in April. This process is designed to slow the release of bitcoin, which is limited in supply to 21 million – of which 19 million have already been mined – by halving the reward for producing the tokens.
Bitcoin has gained 32% in value so far in February, heading for its biggest one-month gain since January 2023, and the momentum is growing beyond the investment community.
Social media platform Reddit, which filed to list its shares on the New York Stock Exchange on February 22, said it has invested a small portion of its excess cash reserves in bitcoin, ether and matic, the native token of the Polygon network, as a form of payment for the sale of certain virtual goods.
Ether has risen at an even faster pace this month, heading for a 41% gain.
Anticipation is growing among market participants for the possible regulatory approval of spot ether ETFs, which has contributed to this latest price increase.
“The prospect of an Ethereum spot ETF is a further development for both traders and investors following the recent launch of a variety of Bitcoin ETFs,” Nick Crawley, senior strategist at DailyFX, said in a note.
“It represents a further maturation of the cryptocurrency market and a recognition of Ethereum’s role in the future of cryptocurrencies within the financial system.”
However, regulatory experts and industry sources expect the U.S. Securities and Exchange Commission to tread carefully on filings for spot ether ETFs, noting that the agency’s approval of bitcoin ETFs may not indicate its willingness to move forward with other crypto products.
Crypto stocks also enjoyed a boost on Tuesday, with shares of cryptocurrency exchange Coinbase (NASDAQ:) rising 5.8%, while bitcoin miners Marathon Digital (NASDAQ:) and Riot Platforms (NASDAQ:) they rose by 5.7% and 0.7% respectively.
The largest bitcoin ETF Grayscale Bitcoin Trust rose 4.4%.