Why bitcoin is soaring above $55,000

The queen of cryptos has gained almost 10% since Monday, driven by strong momentum in the spot bitcoin ETF market in the United States.

It’s a real turmoil on the cryptocurrency market, with bitcoin and ether soaring. Since Monday, bitcoin has gained almost 10%, trading at 9:30 a.m. this Tuesday above $56,000. For its part, ether gained 4% in one day, well above its symbolic threshold of $3,000, at $3,200 at 9:30 a.m. this morning.

These impressive progressions are the result of several good news for bitcoin and ether. On the one hand, we observe impressive flow figures for bitcoin spot ETFs, these financial products indexed to the prices of the queen of cryptocurrencies, with a fourth consecutive week of positive inflows and each time in an increasing manner. For example, there are all-time high trading volumes on Grayscale’s ETF, at $2.4 billion in 24 hours, and Blackrock’s, at $1.3 billion. It is a race for price competitiveness that is pushing bitcoin prices higher.

As a reminder, an ETF (or Exchange Traded Funds) is an index fund trading on a stock exchange which follows the evolution of a stock index (or one or more financial or physical assets, such as gold) by replicating the increase as well as the fall in the price of this index (or these assets).

Change of mentality on bitcoin

Likewise, Microstrategy, Michael Saylor’s software group, took up the cause of bitcoin, declaring yesterday that it had bought back 3,000 bitcoins on the market. The group now has a war chest of 193,000 bitcoins (equivalent to $10 billion), with an unrealized capital gain of $3.8 billion. Also last week, Donald Trump, the former US president, came out in favor of bitcoin as he called the asset a scam in 2021.

In this context, ether also benefits from a real launch pad in anticipation of a regulatory green light for ether spot ETFs from May. But that’s not all: analysts estimate that the number of ether in circulation is decreasing sharply, particularly on cryptocurrency exchange platforms.

Many investors take them out of the market to operate them in “staking”, in passive return, which means that the available money supply decreases. This pushes prices further upwards a few weeks before a new update, Dencun, of the blockchain.