Bitcoin with the largest monthly increase in history

Bitcoin ended February 2024 with its largest-ever monthly gain in dollar terms. Just last month, the price of bitcoin increased by over $18600. As a result, the record increase from October 2021 was broken, when the price of bitcoin increased by over USD 17500. In turn, in percentage terms only in November bitcoin rate increased by almost 44%, which is the largest increase since December 2020. Then the percentage increase in the BTC price was 47%.

Increased liquidity and ETFs have helped cryptocurrencies

Since the launch of Bitcoin ETFs, the total net inflow of funds has amounted to almost USD 7,5 billion. We are talking about the net amount because almost USD 8,5 billion flowed out from GBTC alone, of which almost USD 600 million yesterday, and the rest of the ETFs more than absorbed this supply. ETF from. is in the lead BlackRock with an inflow of over USD 7,7 billion and Fidelity with an inflow approaching USD 5 billion. It remains an open question how deep the pockets of investors who buy ETF units with exposure to Bitcoin are and whether they will have enough capital for halving when the BTC supply drops by half to 450 coins per day.

It is also worth remembering that bitcoin can be treated as the so-called liquidity sponge of the financial system, i.e. when a larger amount of money is available in the system, it goes to the cryptocurrency market, and in this case it may already go to Bitcoin ETFs.

We can observe the level of this liquidity through bank reserves at the Fed, which increased by almost USD 570 billion annually, which is the most since January 2022. This is because funds from reverse repo, which constituted excess liquidity in the market, are still reaching the financial market. However, there is still USD 500 billion left and perhaps this spring reverse repo will stop falling, adding liquidity to the system. Then there may be a certain threat to the cryptocurrency market, not to mention the desire of speculators to make profits.

Inflows into BTC ETFs to watch

At this point, it seems the most important thing to do is continue to watch how Wall Street behaves after Bitcoin's price rose so quickly in February and whether it will continue to build exposure to Bitcoin with such ferocity. If so, the all-time high could be reached before the halving, which could take place on April 18.