Bitcoin (BTC) continued its upward rally on February 27, reaching a 27-month high of $57,513. This surge in price has boosted the broader cryptocurrency market, thanks to increasing investor sentiment and positive inflows into Bitcoin exchange-traded funds (ETFs).
At the time of publication, BTC was trading at $57,073, showing a 10% increase over the last 24 hours.
The last time Bitcoin traded above $57,000 was over two years ago, on December 2, 2021. However, at that time, the price was already at its peak and was beginning a prolonged bear market. By January 24, 2022, the price had dropped to $32,987, representing a 42% decline from its previous stint above $57,000.
Several factors are driving BTC’s current price movement. These include consistent inflows into spot Bitcoin ETFs, the upcoming supply halving, and positive sentiment from both retail and institutional investors.
Let’s take a closer look at the factors behind Bitcoin’s rally today.
Continued buying by institutional investors
Bitcoin’s recent rally came shortly after business intelligence firm MicroStrategy announced that it had acquired an additional 3,000 BTC for a total of $155 million. This purchase was made between February 15 and 25, at an average price of $51,813. MicroStrategy now holds a total of 193,000 BTC, acquired for $6.09 billion at an average price of $31,544.
Moreover, according to data from Farside Investors, the nine new spot Bitcoin ETFs have accumulated a total of 300,000 BTC since their debut on January 11. These holdings are worth $17 billion, and the net inflows have surpassed $6 billion. This means that the nine spot ETFs now hold 1.5% of Bitcoin’s maximum supply of 21 million BTC.
The combination of decreasing supply and strong demand for Bitcoin is expected to drive the price higher in the short term.
Anticipation of upcoming halving event supports Bitcoin price
Bitcoin’s price spike is also seen as a signal of the start of a new bull market, according to Alex Adelman, the founder and CEO of Bitcoin rewards app Lolli. Adelman points to an upcoming “Bitcoin halving” event set for April 20 as a contributing factor. During this event, the reward for mining new blocks on the Bitcoin blockchain will be cut in half. After the halving, the BTC rewards issued to miners will decrease from 6.25 BTC to 3.125 BTC per block.
Crypto trader and analyst Rekt Capital shared a chart illustrating the four phases of the Bitcoin halving. According to Rekt Capital, the current uptick in Bitcoin represents the final “Pre-Halving Rally,” suggesting that deeper pullbacks are unlikely at this point.
Bitcoin short liquidations surge
BTC’s rise above $57,000 has led to a surge in the liquidation of leveraged crypto positions. Bitcoin analyst On-Chain College observed that BTC’s rise above $53,000 resulted in approximately $18 million in Bitcoin short liquidations in just 15 minutes. Over the past 24 hours, about $262 million worth of crypto short positions has been liquidated, compared to $120 million in long liquidations. The largest single liquidation order occurred on Binance for the ETH/USDT pair, valued at $10.38 million.
Market participants anticipate that Bitcoin’s bullish price action will continue, leading the wider market into the long-awaited bull run.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.