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Bitcoin Price Over $60,000: Why it Hit November 2021 Peak And What Drives It Now

Last Updated February 29, 2024 8:39 AM
Teuta Franjkovic
Last Updated February 29, 2024 8:39 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Bitcoin broke past $63,000 for the first time since November 2021, currently hovering near its record high.
  • Leverage trading is amplifying price swings, with liquidations of both short and long positions influencing the market.
  • The possibility of new Bitcoin highs fuels renewed market enthusiasm.

Bitcoin experienced a significant increase  on Wednesday, surpassing the $63,000 mark for the first time since November 2021.

The leading cryptocurrency’s price was last recorded up by nearly 6% at $60,356.75, based on CoinMarketCap data . It momentarily reached $64,000 earlier before declining. The price is approaching its record high of $68,982.20.

How Leverage in Bitcoin Trading Amplifies Price Movements

The volatile price fluctuations have been impacting both optimistic and pessimistic traders. Within the last 24 hours, centralized exchanges saw short position liquidations  amounting to $176 million and long position liquidations totaling $86.1 million, as reported by CoinGlass .

When traders employ leverage to bet against Bitcoin and the cryptocurrency’s value increases, they are compelled to purchase Bitcoin from the market to close their positions. This action drives the price higher, triggering further liquidations of similar positions. On the other hand, traders who speculate on a price rise are forced to sell their holdings to mitigate losses.

BTC liquidations
Credit: CoinGlass

As Bitcoin approaches its record high, the market’s enthusiasm  to revisit this peak has intensified. This week, Bitcoin has surged by nearly 20%, marking an increase of more than 40% in 2024.

Antoni Trenchev, cofounder of crypto exchange Nexo, anticipates some resistance  as Bitcoin nears the $69,000 mark. However, he believes surpassing the $60,000 threshold has revitalized investors interest. He said this was especially  true forthose from the retail sector who had previously remained on the sidelines. JPMorgan notes a resurgence in retail investors’ interest in cryptocurrencies this month, following a lull in January.

BTC 5 years
Credit: CNBC

Bitcoin New Highs Amid ETF Launches and Upcoming Halving Event

Investor anticipation is building for Bitcoin, fueled by the launch of Exchange-Traded Funds (ETFs) and the network’s forthcoming halving event. Such halvings have historically preceded significant market rallies.

Zach Pandl, the head of research at Grayscale Investments, highlights  the surge in Bitcoin demand against a backdrop of diminishing supply. The introduction of new U.S. spot Bitcoin ETFs has seen an influx of approximately $195 million daily in February. This contrasts with the Bitcoin network’s current production rate of around 900 coins per day, valued at roughly $54 million at a $60,000 price point.

With the Bitcoin halving slated for April, the market faces a crunch in supply against burgeoning demand. This imbalance between supply and demand is propelling prices upwards, as there won’t be enough Bitcoin to meet the incoming wave of interest.

ETF holdings
Credit: CryptoQuant

Halving to Slash Mining Rewards, Affecting Supply and Equity Markets

The upcoming halving event, a built-in feature of the Bitcoin protocol, should cut the BTC mining reward in half to help control the cryptocurrency’s supply. This event, expected in April, aims to limit the influx of new bitcoins into the market.

Following a significant rise in Bitcoin’s value, related stocks initially experienced a boost, though they later saw some of their gains retract after Bitcoin’s price corrected. Microstrategy, known for its substantial Bitcoin holdings, saw an increase of 10.5%, while Marathon Digital, a mining company, appreciated by 2.4%. Block, which offers Bitcoin trading services and includes Bitcoin in its assets, saw a near 1% rise.

However, Coinbase, a leading cryptocurrency exchange, witnessed a partial reversal of its gains following reports from users about seeing zero balances and encountering issues with transactions. Despite these challenges, it managed to close the day with a 0.8% increase.

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