February 27, 2024 – 7:35 AM PST
WASHINGTON/LONDON (Reuters) – Bitcoin hit a two-year high on Tuesday, on track for its biggest two-day rally this year, on signs large players were buying the cryptocurrency, while smaller rival ether topped $3,200 for the first time since 2022.
Bitcoin has rallied more than 10% in two sessions, helped by Monday’s disclosure from crypto investor and software firm MicroStrategy (MSTR.O) that it had recently purchased about 3,000 bitcoins for an outlay of $155 million.
The original and largest cryptocurrency by market value has also been buoyed recently by the approval of bitcoin-owning exchange-traded funds (ETFs) in the United States. On Monday, trading volumes in several of the funds spiked and crypto-linked firms rallied too, in contrast to nervous broader markets.
Bitcoin was last up 4.7% at $57,232, while ether reached as high as $3,290, its highest since April 2022.
“There’s only so much supply … but the demand unleashed by the U.S. spot ETFs seems to be relentless,” said Justin d’Anethan, head of partnerships in Asia at Keyrock, a digital asset market maker.
A major incentive right now is the bitcoin halving event in April. This process is designed to slow the release of bitcoin, whose supply is capped at 21 million – of which 19 million have already been mined – by cutting the reward for producing the tokens in half.
Bitcoin has gained 32% in value so far in February, heading for its largest one-month gain since January 2023, and momentum is building beyond the investment community.
Social media platform Reddit, which on Feb. 22 filed to list its shares on the New York Stock Exchange, said it had invested a small portion of its excess cash reserves in bitcoin, ether and matic, the native token of the Polygon network, as a form of payment for sales of certain virtual goods.
Ether has risen at an even faster pace this month, heading for a 41% gain.
Anticipation is growing among market participants over the possible regulatory approval of spot ether ETFs, which has helped this latest rise in price.
“The prospect of a spot ethereum ETF is a further development for traders and investors alike after the recent launch of a variety of bitcoin ETFs,” DailyFX senior strategist Nick Crawley said in a note.
“It represents a further maturation of the cryptocurrency market and a recognition of ethereum’s role in the future of cryptocurrencies within the financial system.”
Still, regulatory experts and industry sources expect the U.S. Securities and Exchange Commission to move cautiously on the filings for spot ether ETFs, noting that the agency’s approval of the bitcoin ETFs might not indicate its willingness to move forward with other crypto products.
Crypto stocks also enjoyed a boost on Tuesday, with shares of crypto exchange Coinbase (COIN.O) up 5.8%, while bitcoin miners Marathon Digital (MARA.O) and Riot Platforms (RIOT.O) climbed 5.7% and 0.7%, respectively.
The largest bitcoin ETF Grayscale Bitcoin Trust (GBTC.P) was last up 4.4%.
Additional reporting by Medha Singh in Bangalore; Editing by Tom Hogue, Kim Coghill, Louise Heavens and Christina Fincher