BlackRock's Bitcoin ETF Sees Record Inflow as Bitcoin Surpasses $64,000: A Sign of Crypto's Resurgent Boom?

Any Bitcoin enthusiast would remember the Crypto winter of 2022, that was the time when the digital asset lost all momentum and trust of investors in terms of being a value adding investment. However, things took a sharp turn on 29 Feb 2024 when Bitcoin breached all areas of value addition and went up to a behemoth $63,933 overnight. 

This was the zenith that the digital asset could reach as far as expectations are concerned. This happened in wake of introducing Bitcoin traded ETFs (Exchange Traded Funds) which pushed the demand several notches higher in the United States. The most benefiting group regarding this affair was Black Rock’s iShare Bitcoin Trust which received a whopping $550 million as investments. Let us know more about this development and know its repercussions and will the appreciation of Bitcoin be sustained.

A virtual representation of Bitcoin
(Source: www.pixabay.com)

Cryptomarkets and Their Road to Recovery

A piece on Forbes published on 13 Feb 2024 tells us about the preceding performance of Crypto assets, At the beginning of 2023 Crypto currencies like Bitcoin and Ethereum were trading in green. The value was $42000 at the start of the year 2023. Until 2024’s February the prices were just barely touching $50000 but the prices shot up rapidly and the worth of the asset has become $64000, and that’s yesterday on 29 Feb 2024. 

Ethereum too is worth $3200 now, which was just $1852 in the early months of 2023. The dynamism in the Crypto market as per the Forbes piece has a lot to do with factors directly affected by US government actions. The weakening dollar index and controlled inflation helped people to preserve their investments in Crypto, along with the SEC allowing 10 Bitcoin ETFs to trade similarly to stocks. ETFs also gave a safety net to the volatility of price flexibility of Bitcoins by not trading it directly but using options, futurism swaps, and other various kinds of derivatives that protect an investor’s money.

A Business Standard Piece where their team recorded the statements of Tony Sycamore, Analyst at Brokerage IG Markets, on 29 Feb 2024, where he says that the recent uptick in the Crypto selling is an indication of a possible all-time high increase in value more than the November 2021 record of the digital currency.

Matt Simpson, City Index’s Senior Market Analysts stated that if this was any other market, he would advise them to be wary about the bubble. But in the case of Bitcoin the crypto market is back with parabolic growth and it's only going to rise moving ahead. The head of Coinbase Brian Armstrong, says that the LSEG data shows around $600 million flowed to the top 10 Bitcoin ETFs by size until Wednesday 27 Feb 2023, when they saw a rampant increase in traffic on their platform.

Bitcoin’s demands at least in the US are not stopping anytime soon as the Federal Reserve has decided to cut down interest rates which makes the yields in equity and other forms of assets less profitable, thus increasing the chance of investments in digital assets. Another notable development is the halving event that is scheduled for April. Halving is a process in which the rate of a token attained from Bitcoin mining is halved, and rewards are handed over to the miners.

Along with Bitcoin (BTC), several other digital currencies saw an appreciation of value including Ethereum (ETH). As of 1st Mar 2024, BTC is trading at $62,500 followed by ETH which is trading at $3,500. Tether (USDT) is trading at $1. Binance Coin (BnB) is trading at $408. Solana (SOL) is also trading at $ 135. Most of the values are approximate estimations as the values update on the real-time update of digital cryptocurrencies, All these numbers are significantly higher than any long-term value appreciation that has happened with Crypto coins since November 2021 which last saw the rage run of crypto markets.

Photo of BlackRock Office
(Source:www.commons.wikipedia.org/)

Blackrock Gets $550 million ETF Investments

Bitcoin craze and hysteria have wrapped everyone in its garb same can be said for Blackrock too as the company managed to get a whooping $6.5 million on their Bitcoin ETF investments on Blackrock iShare bitcoin trust from investors. It’s not an easy feat, and as per Bloomberg, this is the 2nd highest invested ETF across all asset classes across the Financial spectrum in the United States.

The ETF craze has swept up Bitcoin value to superlatives as evident from this statement given to Mint on 29th Feb 2024 by Stephane Ouellette, chief executive of FRNT Financials where she asserted convincingly that the upward trends of price are motivated by legitimizing 10 ETF Funds by the SEC. Along with Black Rock Fidelity Wise Origin Bitcoin Fund reaches close 2nd with $4.6 million infused as investments. 

Jim Bianco from Bianco Research while giving his statement to Mint says that this is no surprise considering Black Rock’s Funds have always stood apart from others. He further added that most of the buyers are retail traders. 

Challenges Moving Forward

Bitcoin has sporadically appreciated its value, but it has its fair share of drawbacks as well. Before the asset is traded the sudden spike in demand created technological challenges. The infrastructure was so fragile that miners could not keep up with the same pace of allocation returns. So much so that Coinbase started showing $0 in the wallets of investors. However, the platform clarified that the outage was very brief, and soon things again went back to normal. In fact, during the outage, the bitcoin’s value started pulling back.

An FX Street piece cited the European Central Bank’s responses regarding this development as ETF becomes legal. The report said the value of Bitcoin is 0 considering that the new ETF values are also zero.

Conclusion

In this piece, we lay a critical gaze on Bitcoin’s value and how legitimizing 10 Bitcoin ETFs led to the incrementing value of the digital asset. Black Rock appeared to be a major investor and the fund is worth $6 million right now. In this piece, we look at the bright, shady, and neutral sides of the development.