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Bitcoin Breaks $69,000 Mark, Surpassing Previous Peak After 846 Days

Bitcoin Breaks $69,000 Mark, Surpassing Previous Peak After 846 Days

Beginner
2024-03-06 | 5m

On March 5th, the cryptocurrency landscape was abuzz as Bitcoin soared, breaking the $69,000 threshold and achieving a new all-time high, setting a new historical high after a gap of 846 days. Data from Bitget indicates that Bitcoin hit $69,074 at 23:00 (UTC+8), while Ethereum also experienced a notable uptick, surpassing $3,800. This surge has ignited considerable excitement and debate within the industry, marking a pivotal moment for the cryptocurrency sector and fueling speculation about future market dynamics.

Three Key Factors Behind Bitcoin's Rally

Bitcoin's recent ascent can be attributed to a trio of significant factors.

First, the U.S. Securities and Exchange Commission (SEC) 's approval of a Bitcoin spot ETF in early January unleashed significant market potential. By facilitating easier access for conventional investors, Bitcoin ETFs have played a vital role in amplifying its value.

Second, the Bitcoin community is keenly anticipating its halving event scheduled for late April. This halving will reduce Bitcoin mining rewards, thereby slowing down the supply of new Bitcoins. Historically, Bitcoin's halving events have often led to significant price increases. When paired with ongoing demand, the anticipated supply shrinkage typically propels prices upward, while speculative activities in the market can further fuel FOMO, continuously boosting Bitcoin prices.

Third, and perhaps most importantly, is the anticipation of a possible interest rate reduction by the Federal Reserve in the second half of the year. Analyzing prior bull markets, the Federal Reserve's aggressive monetary policy was the fundamental reason for the cryptocurrency market's bull run. As global central banks continue to adopt loose monetary policies, investors are increasingly gravitating towards assets perceived as safe havens, like Bitcoin, thus driving capital inflow.

Looking Ahead

Despite Bitcoin reaching new highs and Ethereum steadily climbing, both assets' open interest contracts have returned to record highs, reminiscent of the frenzied days of 2021. The surge in trading activity is a clear signal that the bull market is in full swing. Yet, the parallels to 2021 prompt caution, indicating an overheated market where BTC and ETH prices may further fluctuate. In fact, Bitcoin has risen by over 50% in the past 30 days, while Ethereum has seen a similar increase during the same period.

It is worth noting that technical indicators such as open interest contracts and Bitcoin funding rates (which, collectively, serve as reliable predictive tools) paint a picture of a short-term bubble market.

Significantly, on March 4th, Bitcoin's open interest escalated to $31 billion, surpassing the $24.3 billion record from April 14, 2021, paralleling the days when Bitcoin approached $63,524. Within the subsequent ten days, Bitcoin experienced a notable dip, about 23% to $49,078. Meanwhile, on the same day, Ethereum's open interest in contracts reached approximately $12 billion, close to the peak of $13 billion set on November 9, 2021. Ethereum's opening price hit a historical high of $4,810, but over the next ten days, it rapidly fell by about 17% to $3,996.

Bitcoin Breaks $69,000 Mark, Surpassing Previous Peak After 846 Days image 0

Bitcoin Breaks $69,000 Mark, Surpassing Previous Peak After 846 Days image 1

Bitcoin and Ethereum open interest as of March 4, 2024. Source: CoinGlass

This also explains why Bitcoin dropped quickly after hitting a new high yesterday. As shown in recent CoinGlass data, despite the burgeoning open interest and funding rates, these indicators should not overshadow the intrinsic strengths and market prospects of BTC and ETH. The current trading excitement underscores a broader engagement spectrum, from seasoned traders to new market entrants captivated by the market's potential.

For long-term investors, it's pivotal to recognize the inherent volatility of cryptocurrencies. The current market indicators suggest increased fluctuations ahead. Thus, participants should approach with prudence, focusing on informed decision-making rather than the ephemeral thrill of peak prices. There will be more exciting opportunities in the coming months. Those who remain calm in market turmoil will be the most successful in this bull market.

Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.