Feb 28, 2024

Bitcoin’s near-vertical rise continues, with the cryptocurrency scaling the $59,000 mark early Wednesday. Ether (ETH) topped $3,300, and the CoinDesk 20 Index, a measure of the broader market, jumped 3.5% to $2,177. The bears, if any, have been put on notice as bitcoin (BTC) is now just 16% short of challenging the record high of $69,000. The distance could be covered easily before April’s mining reward halving, assuming Wall Street continues pouring money into the spot exchange-traded funds, maintaining the demand-supply imbalance. That said, the market increasingly looks overheated, not only in terms of funding rates, but also because, as Santiment data show, the top trending cryptocurrency on social media in the past 24 hours is PEPE. The meme token’s market cap has skyrocketed by 153% this week, CoinDesk data show. Such frenzied action in smaller coins often presages market-wide price pullbacks. While past performance is no guarantee of future behavior, some traders have started purchasing bitcoin puts to hedge potential downside risks. 

^{Source: Santiment}

BlackRock's spot bitcoin exchange-traded fund (ETF) on Tuesday set a record high of $1.36 billion in trading volume, surpassing Monday's $1.3 billion tally, according to Bloomberg Intelligence ETF analyst Eric Balchunas. The ETF, which trades under the ticker IBIT on Nasdaq, saw nearly 42 million shares change hands, more than double its lifetime average. While high volume is often perceived as bullish, it's not necessarily the case, according to NYDIG's global head of research, Greg Cipolaro, who prefers to track the ratio between the dollar trading volume and the fund's net asset value. "This ratio shows the proportion of the fund's assets traded on any given day, offering a glimpse into the investor and trader profiles and potentially what motivates their investment choices," Cipolaro wrote.  

While Wall Street has embraced digital assets, "the powers that be" maintain their tough stance. In an interview with Bloomberg on Tuesday, U.S. Sen. Elizabeth Warren (D–Mass.) called out the crypto industry for being reluctant to follow the rules that guide the U.S. financial system. "I wanna collaborate with the industry, what I don't understand is why the industry seems to be saying that the only way that they can survive is if there's plenty of space for the drug traffickers and the human traffickers, oh and the terrorist, and the ransomware scammer, and the consumer scammers …," Warren said. 

MicroStrategy (MSTR) has a unique business model based on the acquisition and holding of bitcoin (BTC), which represents the majority of the software company’s valuation, investment banking firm Benchmark said in a Tuesday research report initiating coverage of the stock.

Benchmark has a buy rating on the shares with a $990 price target. MicroStrategy added about 9% to $871.80 in early trading on Wednesday.

“We believe the boost in demand for bitcoin resulting from the launch of multiple spot bitcoin ETFs, combined with the reduced pace of supply resulting from the halving, has the potential to drive the price of the cryptocurrency meaningfully higher during the next couple of years,” analyst Mark Palmer wrote. 

- Omkar Godbole