Bitcoin delighted investors in February, as its value soared to the highest levels seen in recent years, peaking at $64,000. The cryptocurrency‘s value stabilized at $62,216 as the month concluded, notching a remarkable 45% increase from its starting point, marking its most robust monthly performance since December 2020.
Spot ETFs and Halving Events Propel Bitcoin’s Rise
Recent reports highlight Bitcoin exchange-traded funds (ETFs) breaking records in February, with a single-day net influx of $677 million. With net entries totaling over $2 billion across various Bitcoin ETFs, the demand for Bitcoin’s finite supply escalated as ETFs required additional Bitcoin for creation. Market analysts attribute the cryptocurrency’s significant appreciation to its supply and demand dynamics.
Sylvia Jablonski, CEO and Chief Investment Officer of Defiance ETFs, cites the introduction of new Bitcoin spot ETFs and the approaching Bitcoin block reward halving as key drivers of Bitcoin’s price surge.
Historical performance data from CoinGlass suggests that February often brings prosperity for Bitcoin, with the cryptocurrency closing the month on a positive note in 10 out of the past 12 years, averaging a 15.7% return for investors.
Michael Novogratz Cautions Investors Amid Rally
Michael Novogratz, a seasoned Wall Street figure and CEO of Galaxy Digital, cautioned that despite the current bullish trend, Bitcoin could see corrections. He foresees potential pullbacks to the $50,000 mark preceding future gains and advises vigilance, especially due to excessive leverage within the market.
Novogratz points out that while the rally post-spot ETF launches may bring profit for some, it may also result in considerable losses for others, particularly younger investors seeking high returns. He stresses the importance of prudence in light of the market’s elevated leverage levels.