The increasing demand for the world’s largest cryptocurrency by market cap, fueled by the growing popularity of spot bitcoin ETFs, is exerting a significant influence on the market.
According to Coinshares Head of Research, James Butterfill, while 900 bitcoins are produced daily, the newly issued US ETFs are demanding an average of 2,800 bitcoins per day.
“This has led to a 28% reduction in exchange holdings since 2020, indicating a market experiencing a significant demand shock,” said Butterfill.
Spot Bitcoin ETFs once again broke a daily trading volume record on February 28 2024, with the price of the cryptocurrency rising as high as $64,000 on some exchanges before quickly plunging to nearly $60,000 in a matter of minutes.
Bitcoin is currently exchanging at about $61,350 on CoinGecko having surged approximately 40% in the past month, coinciding with the start of spot bitcoin ETF trading on January 11 2024.
“The Bitcoin price surge to a high of US$64,000 has sparked curiosity about the factors driving this increase,” said Butterfill.
“Until recently, Bitcoin prices were closely aligned with expectations for interest rate cuts, but have since diverged following the introduction of US spot-Bitcoin exchange-traded funds. These ETFs have significantly influenced recent price trends.”
In total, spot Bitcoin ETFs reached a new daily record on February 28 2024, with more than $6 billion traded, as reported by Bloomberg Intelligence ETF research analyst, James Seyffart. The increased volume surpassed the previous daily volume record set on the launch day of these products, Seyffart noted.
RIDIC: the New Nine doubled their volume record (set Monday) with just about $6b traded.. $IBIT led w $3.3b of it, Fidelity did $1.4b (both double their prev records). The total number of trades was double too, over half a million individual trades bt them. $IBIT alone > $QQQ. pic.twitter.com/ZzB5PWXA4f
— Eric Balchunas (@EricBalchunas) February 28, 2024
Meanwhile, Coinbase CEO, Brian Armstrong, tweeted that the exchange is facing an influx of traffic amid Bitcoin’s latest bull run.
“We are dealing with a LARGE surge of traffic – apologies for any issues you encounter,” Armstrong tweeted.
“The team is working to remediate.”
Coinbase has a track record of grappling with demand during Bitcoin rallies. The exchange has experienced outages in the past, notably in 2020 and 2021, particularly during periods of significant Bitcoin price increases.
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