On Tuesday, Bitcoin surpassed its previous all-time high from November 2021, as it moved above the $69,000 mark. Economists at Deutsche Bank lay out five reasons why it is trading at a record high – and will stay high.

ETF spot Bitcoin record inflows

Demand for the new US spot Bitcoin ETFs has driven recent gains in Bitcoin prices. Since the SEC's approval on January 10th, nearly $7.9bn in funds have flowed into the new spot Bitcoin ETFs.

More ETFs are likely coming

The SEC's first decision on a spot Ethereum ETF application, one submitted by VanEck, is expected by May 23. ProShares has revealed its plans to launch five additional cryptocurrency ETFs, including one that would provide twice the daily exposure to a Bitcoin-tracking index. Overall, the evolving ETF landscape and participations of institutional players are helping crypto mature into a more established asset class.

The impending Bitcoin halving draws nearer

April 2024 will mark a significant event in the world of cryptocurrencies – the fourth Bitcoin halving is fast approaching. As the date draws nearer, much attention is focused on Bitcoin's typical price action surrounding previous halving events. In the 30 days prior to the November 2012 halving, prices rose by 5%. A more substantial 13% gain was seen ahead of the July 2016 event. Most recently, there was a sizable 27% price increase in the month before the May 2020 halving.

Economic winds of change signal smoother skies ahead

As central banks start cutting interest rates from the decade-high levels seen in 2022, this is expected to fuel rising risk appetite and increased market liquidity. More investors will likely seek out higher-yielding alternative assets as treasury returns decline. This flow of capital into non-traditional investment classes like cryptocurrencies could further support an ongoing rally in digital currency prices.

Regulation marches onwards

A clearer regulatory framework is expected to drive increased corporate adoption and higher liquidity (resulting in less concentration), and, ultimately, help address volatility. These factors, in turn, should contribute to an increase in Bitcoin prices.

 


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