NOIDA (CoinChapter.com) — Bitcoin price crossed $50,000 for the first time since December 2021, adding fuel to speculations of a $100,000 BTC price level by 2024 end. The impact of institutional investments in the recent rally is significant, especially after the spot Bitcoin ETF launch in January this year.
One of the most significant drivers behind Bitcoin’s ascent has been the increasing institutional investment in BTC.
Companies like MicroStrategy and notable figures such as Elon Musk’s endorsements of Bitcoin in the past helped the token register gains, highlighting the impact of institutional investments on BTC price action.
Bitcoin Institutional Investor Key To Rally
The increase in Bitcoin’s price is partly due to significant inflows into Bitcoin ETFs, with the launch of spot Bitcoin ETFs by major financial firms such as BlackRock and Fidelity. These ETFs have attracted over $9 billion in inflows since their introduction, highlighting strong institutional interest in the token.
Moreover, expectations surrounding U.S. inflation data have helped launch a recovery cycle for Bitcoin that has led to a more than 225% increase in value since Dec. 2022.
The accumulation of Bitcoin by institutions and a rise in whale holdings highlight a supply-demand imbalance. Demand for Bitcoin-related financial products significantly outstrips the available supply, a situation emphasized by Michael Saylor of MicroStrategy.
A basic rule of economics says that when demand increases while supply dwindles, the price of an asset rises.
Expectations for rate cuts by the Federal Reserve, driven by anticipated reductions in inflation rates as indicated by the U.S. Consumer Price Index (CPI) report, have improved investor risk appetite, contributing to the price rally.
Moreover, an increase in Bitcoin options bets, with traders targeting values as high as $55,000, indicates a bullish sentiment in the market.
However, correction risks remain, with analysts warning traders not to get caught up in the hype. Several traders might be looking to book profits as Bitcoin prices near 2-year highs, possibly setting up the token for a correction sooner rather than later.
Spot Bitcoin ETFs Siphon BTC Tokens
The recent data on spot Bitcoin exchange-traded funds (ETFs) reveals a significant shift in the Bitcoin market dynamics. On Feb. 12, spot Bitcoin ETFs absorbed ten times more Bitcoin than miners produced on the day, indicating an intense demand from institutional investors.
Per data from Blockchain.com, spot ETFs saw inflows of approximately $493.4 million, equivalent to around 10,280 Bitcoin, while miners could only produce about 1,059 BTC, valued at roughly $51 million.
BlackRock’s iShares Bitcoin Trust led the charge with inflows of $374.7 million, followed by Fidelity’s Wise Origin Bitcoin Fund with $151.9 million, and Ark 21Shares Bitcoin ETF with $40 million.
Despite outflows from Grayscale and the Invesco Galaxy ETF, totaling $115.8 million, the net inflows nearly reached $500 million.
A crypto investor shared a post on X, highlighting that retail Bitcoin holders are booking profits and that the smallest holders (0-1 BTC) have sold nearly 6,015 BTC in the last 30 days. 1-100 BTC holders are also booking profits, the post noted.
Interestingly, ETF firms are on a buying spree, which could result in more bullishness for Bitcoin prices in the coming days.
