Bitcoin Just Set a New All-Time High. What's Next?
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As the stock market continues to strengthen in 2024, so too does the crypto market. Leading the charge is bitcoin, which set its new all-time high of $69,050 on Tuesday morning.
Bitcoin has posted a 52% year-to-date gain and is up 230% since its one-year low in March 2023. The coin — which serves as the bellwether for the crypto market — has attracted heightened attention as it broke its all-time high, previously set on Nov. 10, 2021, according to Dow Jones Market Data.
The movement of bitcoin tends to dictate the price trends followed by the rest of the crypto market. After rallying in 2023, bitcoin maintained its momentum this year culminating in a new record-high price, with many believing it will continue its run thanks to recent catalysts and highly anticipated developments to come.
Why bitcoin prices are rising
Last month marked the second time that bitcoin surpassed the $60,000 mark, and the first time since doing so since October 2021. Bitcoin went on to reach its then-all-time high in November 2021, before the start of a prolonged bear market sent prices reeling.
After bottoming out at about $16,452 in November 2022, bitcoin has been steadily appreciating for 14 months, punctuated by the cryptocurrency topping the $60,000 mark once again in February. That momentum carried over into March, with bitcoin testing the $68,000 mark Tuesday morning before setting its new all-time high.
Several factors can be attributed to its turnaround. For one, the investing landscape vastly improved last year. In early 2022, the Federal Reserve began raising interest rates to combat rampant inflation. The 11-hike campaign was effective in reducing inflation, but it caused turmoil in the markets as many investors pulled out of higher-risk investments — like stocks and cryptocurrencies — and moved money into savings and debt instruments (like bonds), which were offering their highest yields in decades.
As the Fed eased off rate hikes, the stage was set for a stock market comeback, with the S&P 500 posting a 26.3% gain in 2023. While investors may be wondering how this correlates to bitcoin's performance, experts are increasingly finding that cryptocurrency and stocks tend to follow similar patterns of price fluctuations, helping explain why bitcoin was able to find its footing alongside Wall Street.
As inflation and unemployment subsided over the past two years, investors began moving funds back into assets like stocks and crypto.
“People want to capitalize on their ability to diversify,” says Victoria Bills, chief investment strategist at Banrion Capital Management. This is especially true after a 2022 in which investors focused on protecting their money instead of growing it.
The stock market's rebound hasn't been the only driver of bitcoin prices. Early 2024 saw the Securities & Exchange Commission (SEC) approve the first spot bitcoin ETFs. These exchange-traded funds created a way for people to invest in bitcoin without having to buy it directly from a crypto exchange or maintain the asset themselves in a crypto wallet. Bills credits the advent of spot bitcoin ETFs for "[having] brought in additional capital from investors who were interested in learning about and investing in Bitcoin.”
In the month and a half since these ETFs debuted, they’ve already surpassed expectations. Prior to their SEC approval, experts said that “achieving $5-10 billion [in assets under management, or AUM] in the first 3 months would be an unprecedented success” for those ETFs, according Martin Leinweber, digital asset product strategist at MarketVector Indexes. Less than one month after approval, BlackRock’s spot bitcoin fund alone reached $5 billion in AUM. Besides a brief (and predicted) sell-off immediately after approval, bitcoin appreciated in value by over $15,000.
How high can bitcoin go?
Other catalysts lie ahead for bitcoin in 2024, including the highly-anticipated bitcoin halving event in April. When this occurs, the amount of new bitcoin being produced slows by 50%. This will bottleneck the growth of total bitcoin supply and theoretically send prices upward through the laws of supply and demand. Leinweber is one of many who expect another price surge in late April due to the halving event.
“Bitcoin has a tendency to ‘parabolic advances’ in price and it seems to happen every halving event,” he says. “This next halving event is April 2024; this, combined with the fundamental shape of new investors flowing into bitcoin ETFs, will once again trigger the parabolic advance — a bull market.”
What Leinweber expects in the future is the further legitimizing of the cryptocurrency industry through continued adoption by new investors. Unlike previous bull markets, where a smaller number of investors were leveraging bitcoin investments with borrowed money, Leinweber expects this one to be brought on by “macro asset allocation,” or the integration of cryptocurrency into portfolios as part of a broader, perhaps multi-asset strategy. This will bring, as Leinweber says, “a reduction in speculation and more stability in price. Instead of parabolic shifts, expect smoother trends.”
As for price, many expect the upward trend to continue. In January, Trading.biz analyst Cory Mitchell told Money that bitcoin’s price “could extend to $70,000 or higher in a matter of months,” a prediction that appears to be coming true and would put the asset north of its all-time high. Bills says that she expects the continuing adoption of spot ETFs, combined with the halving event, to push bitcoin prices to $100,000 by year’s end.
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