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Key Takeaways
- Bitcoin touched $70,000, its second all-time high this week, before swinging wildly between losses and gains.
- Demand for bitcoin, driven by spot bitcoin ETFs, is likely driving its price higher.
- A rate cut by the Fed could help make bitcoin more attractive as treasury yields decline.
- Ether (ETH) came within striking distance of $4,000 before trending lower.
Bitcoin (BTC) hit another record Friday, briefly touching $70,000 on Coinbase before tumbling back down to under $67,000 and then rebounding to more than $68,000. It was the second all-time high and subsequent fumble this week for the largest cryptocurrency by market cap.
Bitcoin has been rallying this year as billions of dollars have flowed into spot bitcoin ETFs after the SEC in January approved 11 such funds. Investors are also anticipating an upcoming halving, a seminal event that generally results in the price of bitcoin going higher.
Given massive inflows into bitcoin ETFs, analysts at Deutsche Bank say that the “crypto world is gradually moving towards greater institutionalisation as traditional financial players enter the market.”
The bank also expects risk appetite to increase when the Federal Reserve starts cutting interest rates.
“More investors will likely seek out higher-yielding alternative assets as treasury returns decline,” Deutsche Bank’s Marion Laboure and Cassidy Ainsworth-Grace wrote in a note on March 7. “This flow of capital into non-traditional investment classes like cryptocurrencies could further support an ongoing rally in digital currency prices.”
And bitcoin wasn’t the only cryptocurrency on the rise. Ether (ETH) came within striking distance of $4,000 on Friday before trending lower.