The largest cryptocurrency in the world by market capitalization, Bitcoin, continued its upward trend in Asian trade on Tuesday, hitting a two-year high of almost $56,000 and boosting the whole cryptocurrency market amid encouraging market developments and purchases from bulls.
(Photo : by MARVIN RECINOS/AFP via Getty Images)The largest cryptocurrency in the world by market capitalization, Bitcoin, continued its upward trend in Asian trade on Tuesday, hitting a two-year high of almost $56,000 and boosting the whole cryptocurrency market amid encouraging market developments and purchases from bulls.
According to statistics from CoinMarketCap, the price of bitcoin rose by more than 10% in only two days after software and cryptocurrency investment business MicroStrategy said on Monday that it had bought over 3,000 bitcoins for $155 million.
The largest owner of bitcoin that is currently openly traded is MicroStrategy, a Virginia-based company. Earlier this month, the corporation disclosed that it held over 190,000 cryptocurrency tokens, which is now valued at over $10.5 billion.
Greta Yuan, head of research at digital asset platform VDX, said that a "new record of Bitcoin ETF inflows" and the presence of "crypto bulls such as MicroStrategy" had "encouraged" the market.
The recent surge helped the majority of the bitcoin market. The value of Ethereum, the second-largest cryptocurrency by market capitalization, surged beyond $3,200 for many months.
Trading in U.S. stocks linked to cryptocurrencies also increased. MicroStrategy and Coinbase, a cryptocurrency exchange headquartered in San Francisco both increased by more than 16% on Monday and kept rising in post-market trade.
Over the past year, the stock prices of the two firms associated to cryptocurrency have increased by 200%.
Alesia Haas, the CFO of Coinbase, said this week that the company's recent impressive financial performance were due to the regulatory approval of spot bitcoin ETFs in the U.S. last month, which sparked a fresh interest in cryptocurrencies.
The rising price of bitcoin, according to VDX's Yuan, also reflects the "bullish sentiment of investors, especially in the U.S.", in anticipation of the impending "bitcoin halving," which is scheduled for the second half of April.
Every four years, a bitcoin halving event occurs, reducing the reward for bitcoin mining, which is the process of digitally verifying transactions on the blockchain. This reduction halves the rate at which new bitcoin tokens are created, resulting in a decreased supply of new bitcoins.
Yuan, a market analyst, noted that as the Bitcoin halving approaches, investors are strategically positioning themselves for the event, as evidenced by the record-high inflow volume of Bitcoin ETFs. This surge in investor confidence indicates a bullish sentiment among market participants.
The recent strong performance of Bitcoin coincides with a decline in the value of the U.S. dollar observed on Monday and Tuesday. Market participants are closely monitoring U.S. economic data releases scheduled for the week, which could provide insights into the Federal Reserve's potential timeline for interest rate adjustments.
Historically, Bitcoin prices have exhibited an inverse correlation with the U.S. dollar index, further contributing to the current market dynamics.
