Two Reasons BTC Exploded Above $51K Today

Bitcoin’s price continues increasing and is currently trading at around $51,500. This marks a massive surge of over 3% in the past hour and some 20% in the past week.

The move comes after the price went into massive volatility yesterday, tumbling toward $48K and leaving more than $200 million worth of liquidated positions.

While this turbulence showcases the heightened risks of using high leverage, it’s important to take a closer look at a few of the reasons that might have caused Bitcoin’s price to increase above $50K today.

Bitcoin ETF Flows Soar

The approval of a spot Bitcoin ETF by the United States Securities and Exchange Commission (SEC) was a landmark achievement for the entire cryptocurrency industry. It took place earlier in January and was followed by a significant sell-the-news situation where Bitcoin’s price tumbled by more than 20% in the days that followed.

However, the longer-term impact of a spot Bitcoin ETF might as well be starting to show as the flows into this traditional investment product continue to increase.

Data shows that on over $630 million was invested into BTC exchange-traded funds on February 13th alone. GBTC continues to see outflows, but IBIT and FBTC see increased interest each day.

Recall that spot Bitcoin ETFs allow traditional investors an avenue toward BTC without all the (relative) hassle associated with transacting and storing. It’s also a recognized financial instrument that can be used in the broader TradFi ecosystem.

We have prepared a dedicated video on the difference between buying spot BTC ETF and buying BTC directly. Take a look here:

Excitement Surrounding the Upcoming Bitcoin Halving

Not an unimportant reason that’s perhaps playing a part in the recent bullish sentiment, not just today’s rally, is the upcoming Bitcoin halving and the excitement that surrounds it.

The halving will slash BTC’s inflation in half, reducing miners’ reward for adding blocks to the network. This eliminates 50% of the BTC supply that’s available for sale, potentially decreasing the selling pressure as well.

Standard economic principles dictate that if the supply of an asset declines while the demand for it remains the same or increases, its price should go up.

This has also been the historical case for Bitcoin throughout all the previous halvings. Every time, there is a major bull run following the event. It’s entirely possible that investors are positioning themselves for an incoming rally.

The post Two Reasons BTC Exploded Above $51K Today appeared first on CryptoPotato.