Bitcoin topped 64,000 level yesterday, fueling hopes for many that it is only a matter of time before it reaches its all-time high and begins its journey towards new heights. The slogan on the Street is 100K in 100 days, as investors continue to remain highly bullish about the whole sector and believe that the game hasn’t even started yet.
Price Action
On Wednesday, Bitcoin (BTC) topped the level of $64,072 for the first time in nearly two years; the price was below $51,000 only last week. It did drop over 6% after touching the 63,000 mark yesterday. Bitcoin's price peaked in November 2021 when it hit $69,045. At the time of writing this, Bitcoin’s market cap was well over $1.2 trillion, while the market cap of the entire crypto market was over $2.3 trillion, and bitcoin’s dominance in the cryptocurrency market was 53.5%.
Naysayers
Many naysayers had said that the golden days were over for the when its price began to drop after the much anticipated Bitcoin spot ETF was finally launched. However, once again, Bitcoin's bears are facing more pain as the price seems to have started its real rally. The Bitcoin spot ETF added more than 12K bitcoin on Tuesday on top of 10,000 bitcoin on Monday as investors rushed to secure their portion of bitcoin ahead of the much-anticipated bitcoin halving event taking place in April—an event that takes place every four years and is generally associated with strong demand for bitcoin due to the slowdown in the process of issuance of new bitcoin.
Although bitcoin has yet to cross above its all-time high, there are many reasons to remain optimistic about the current rally. Still, investors have started to worry as the spread between perpetual funding rates in BTC and ETH dropped, which means that investors are growing their risk appetite. When the risk appetite increases among investors, they begin to look further away from Bitcoin, and the focus goes into the altcoin space, which adversely influences Bitcoin’s dominance.
As mentioned above, the current dominance of Bitcoin in the cryptocurrency space is 53%, and with the being well above the reach of many investors, speculators turn to smaller coins as they feel that they can get a bigger bang for their buck.
Demand
Nonetheless, the demand for Bitcoin continues to remain strong, especially among wealthier investors, as the actual bitcoins bought by US ETFs were 11,211 while the bitcoins produced by miners were 900, so the demand is nearly 12 times higher than what the current supply is producing. This continues the FOMO cycle among investors, who should secure their portion of bitcoin now before it gets too late as there is a limited supply of bitcoin.
To conclude, I think the bitcoin rally is very much in its early days, and the actual hype and interest will only peak when the price breaks the 100K price mark, which could take place as halving comes closer. The rally will likely continue to attract speculators in the space, which means that the current dominance that Bitcoin has may fall further, and the safest bet for investors would be to keep an eye on the top 100 list by market cap and perhaps avoid the ones that are several decimals after zero.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Naeem Aslam
I am a former Hedge Fund Trader with over 15 years of experience in investment banking. During my early career, I was awarded a national award (Young Irish Broker) in 2010. Over the years, I have worked with Bank of America in equity trading and with Bank of New York in hedge fund trading. I specialize in Blockchain technologies (cryptocurrencies and digital assets) and Sustainable Investments. In my career thus far, I have also extensively covered Equities, Commodities and Forex.
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