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Bitcoin Hits $1 Trillion Market Cap But $217 Million Liquidated in a Single Day

Last Updated February 14, 2024 2:06 PM
Teuta Franjkovic
Last Updated February 14, 2024 2:06 PM

Key Takeaways

  • Bitcoin’s return to a trillion-dollar market cap reflects renewed investor confidence in the crypto’s long-term potential.
  • The cryptocurrency’s increasing scarcity and the approaching halving event suggest further potential for price appreciation.
  • The rapid success of spot Bitcoin ETFs signals growing institutional interest, fueling demand for the cryptocurrency.

During Wednesday’s European morning hours, the price of Bitcoin (BTC) surged past $51,000 , reaching a market capitalization of $1 trillion  for the first time since December 2021, according to data.

The increase was fueled by optimistic expectations for the sustained growth of Bitcoin, the largest cryptocurrency, with options traders speculating that prices could soar to as much as $75,000  in the upcoming months.

Bitcoin Circulation Nears Cap with 93.46% of Total Supply in Circulation

The circulating supply  of Bitcoin has reached 19,627,443 BTC, constituting 93.46% of its maximum supply limit of 21 million coins. This milestone highlights the growing scarcity of digital assets as they edge closer to their supply cap.

This trend is buoyed by increasing positive investor sentiment , driven by factors such as the ongoing bull market and the approval of spot Bitcoin ETFs in the United States, which are having a broad impact on the cryptocurrency ecosystem.

The surge in Bitcoin investment from both retail and institutional investors has contributed to a steady rise in Bitcoin’s price, underscoring its sustained value appreciation in the market.

Bitcoin market cap
Credit: CoinMarketCap

Bitcoin’s Previous $1 Trillion Market Cap Achieved During 2021 Bull Run

Bitcoin previously achieved a $1 trillion market cap milestone in November 2021 amidst a significant bull run that propelled BTC to a temporary all-time high of $69,000 .

This period of intense growth was not limited to Bitcoin alone but was also reflected across the broader cryptocurrency ecosystem, culminating in a landmark combined market capitalization of $3 trillion for the first time in the industry’s history.

Combined market cap
Credit: CoinMarketCap

The forthcoming Bitcoin halving event is projected to be a major catalyst in elevating the market price of Bitcoin. An analysis by Grayscale  suggests that Bitcoin ETFs have the potential to fundamentally alter the demand-supply dynamics of the cryptocurrency, effectively mitigating the selling pressure typically associated with halving events.

Over $217M in Bitcoin Liquidations in 24 Hours, Driven by Short Positions

According to data from Coinglass , there has been a substantial $53 million in liquidations, mainly from short positions, in the past hour alone. This figure escalates dramatically over the last 24 hours, with more than $217 million worth of liquidations recorded, highlighting the volatile nature of the cryptocurrency market.

Liquidations data
Credit: Coinglass

Grayscale Highlights Bitcoin’s Mining Rate and Market Dynamics

According to Grayscale’s analysis , with the current mining rate set at 6.25 Bitcoin per block, the annual output translates to an approximate value of $14 billion, assuming a Bitcoin price of $43,000. This indicates that to sustain the existing market prices, a buy pressure equivalent to $14 billion is necessary within the same timeframe.

The report says : 

“Post-halving, these requirements will decrease by half: with only 3.125 Bitcoin mined per block, that equates to a decrease to $7 billion annually, effectively easing the sell pressure.”

The price of Bitcoin significantly influences the operational expenses of miners. The anticipated halving event will decrease the mining reward to 3.125 BTC, necessitating a sustained high market value of Bitcoin to ensure that mining remains an economically feasible activity.

Spot Bitcoin ETFs Outpace SPDR Gold Trust in Investor Interest

A key driver behind Bitcoin’s recent upward trajectory has been the consistent influx of aforementioned positive developments from spot Bitcoin ETFs, which have been on the market for a full month.

The remarkable success of new spot Bitcoin ETFs is underscored by their rapid accumulation of over $3 billion in net flows within just a month, a milestone that took the SPDR Gold Trust (GLD) nearly two years to achieve. This comparison, highlighted by Bloomberg Intelligence analyst Eric Balchunas, emphasizes  the significant investor interest in Bitcoin ETFs. On Tuesday alone, the ETFs experienced their largest single day of net inflows, propelling BlackRock’s iShares Bitcoin Trust (IBIT) to hold 100,000 BTC.

A pivotal measure of investor sentiment, the open interest in Bitcoin futures contracts, has reached $22 billion, as reported by CoinGlass . This level of BTC open interest has not been observed since November 2021, coinciding with Bitcoin’s all-time high of $65,000, indicating a resurgence of enthusiasm in the cryptocurrency market.

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