Bitcoin hit a two-year high on February 27 on signs of large players buying the cryptocurrency, fueled by a Monday disclosure from crypto investor and software firm MicroStrategy that it had recently purchased about 3,000 bitcoins for an outlay of $155 million.
Bitcoin has rallied more than 10 percent in two sessions.
Here are the factors behind the original cryptocurrency rally:
US Markets
The original and largest cryptocurrency, by market value, has also been buoyed recently by the approval of bitcoin-owning exchange-traded funds (ETFs) in the United States.
On February 26, trading volumes in many funds spiked, and crypto-linked firms rallied too, in contrast to nervous broader markets.
"There's only so much supply ... but the demand unleashed by the U.S. spot ETFs seems to be relentless," said Justin d'Anethan, head of partnerships in Asia at Keyrock, a digital asset market maker.
Interest Rates
Investors hope that the Federal Reserve is done with interest rate hikes, and might soon move to cut rates. Hence, they are now turning towards riskier assets like bitcoin and smaller cryptocurrencies like ether, and even dogecoin.
Spot Bitcoin ETFs
According to CNBC, in a note, JPMorgan’s Nikolaos Panigirtzoglou pointed three key catalysts that help explain the renewed interest: the bitcoin halving and Ethereum’s next tech upgrade — both of which JPMorgan sees as priced in — and the potential approval of spot ether ETFs.
Crypto-related equities also surged in trading in the US MicroStrategy and San Francisco-based crypto exchange company Coinbase both surged over 16 percent and continued gaining in aftermarket trading, as per a report by CNBC.
(With wire inputs)
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