Bitcoin's Winning Streak: ETF Momentum and Policy Dynamics

Bitcoin nears longest winning streak since pandemic, sustaining momentum amidst ETF developments

Bitcoin is on track for its fifth consecutive month of gains, a trend not seen since the pandemic-driven rally, fueled by the debut of US spot Bitcoin exchange-traded funds (ETFs) and shifting views on monetary policy.

30.01.2024, 08:00
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Bitcoin nears longest winning streak since pandemic, sustaining momentum amidst ETF developments

Bitcoin is poised to achieve a noteworthy milestone by marking its fifth consecutive month of gains, a feat not seen since the pandemic-triggered rally that unfolded amid abundant monetary stimulus. The leading digital asset experienced a roughly 2% increase in January, characterized by significant market fluctuations driven by the introduction of the first US spot Bitcoin exchange-traded funds (ETFs) and evolving perspectives on monetary policy.

If this positive trend persists, it would represent Bitcoin’s lengthiest winning streak since the six months from October 2020 to March 2021, during which it reached a record high of nearly $69,000 in November 2021.

The introduction of spot Bitcoin ETFs by major issuers like BlackRock Inc. and Fidelity Investments on January 11 marked a pivotal moment. In anticipation of these launches, Bitcoin witnessed a substantial 160% surge in the previous year, fueled by the expectation that these ETFs would attract new investors.

Following the ETFs’ debut, Bitcoin experienced a 12-day downturn of approximately 21%, as market participants closely monitored their performance. The Grayscale Bitcoin Trust, a $21 billion fund that transitioned into an ETF format on January 11, saw initial withdrawals from investors after the conversion. However, the pace of these withdrawals has slowed, contributing to Bitcoin’s recovery from losses.

 

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Sean Farrell, the head of digital-asset strategy at Fundstrat Global Advisors LLC, noted that the deceleration in outflows from the Grayscale fund is a significant positive for market sentiment.

Data compiled by Bloomberg indicates that the ten ETFs, collectively, have attracted a net inflow of $1 billion. This group’s successful launch is considered the most triumphant in ETF history, judging by both trading and flow metrics, according to Bloomberg Intelligence.

Investors are eagerly anticipating the Federal Reserve’s upcoming interest-rate decision, with roughly even odds assigned to the possibility of a rate cut in March. Any substantial changes to this outlook could impact Bitcoin and the broader Cryptocurrency markets, given their sensitivity to shifts in sentiment and perceptions of liquidity.

As of 7 a.m. Tuesday in London, Bitcoin remained relatively stable at $43,340, while smaller tokens such as BNB and Cardano exhibited mixed performance within relatively narrow trading ranges. It’s worth noting that for those interested in trading Bitcoin and other Cryptocurrencies, eToro, a leading Forex broker, offers a platform for such transactions, providing a convenient avenue for individuals to engage in the dynamic Cryptocurrency market.

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