Bitcoin sets new historical record

On March 11, Bitcoin broke through $71,000 for the first time during Asian trading hours, a new price record for Bitcoin. Bitcoin has been rising steadily since the Bitcoin spot ETF was approved in the United States on January 11. Ethereum broke through $4,000.

The rally has pushed the annualized premium for three-month futures to more than 25% on major exchanges, including Binance. Higher premiums are likely to attract cash and arbitrage traders, boosting liquidity across the market.

There are three reasons behind Bitcoin's breakthrough of $71,000. The first is the London Stock Exchange's decision to accept applications for Bitcoin and Ethereum exchange-traded notes (ETNs). The UK Financial Conduct Authority opened the door on Monday for institutional investors to create crypto-asset-backed exchange-traded notes. The London Stock Exchange subsequently confirmed that it will accept applications for Bitcoin and Ethereum ETNs in the second quarter of this year.

The founder of the communication service company LondonCryptoClub said that the rise of Bitcoin and Ethereum is the result of multiple factors. The London Stock Exchange has just announced that it will accept applications for Bitcoin and Ethereum ETNs, Asia is buying in the market with insufficient liquidity, and coupled with continued good news, the strong supply and demand momentum of Bitcoin ETFs continues unabated.

Meanwhile, the macroeconomics that had been a headwind now become a tailwind as US interest rates and the dollar appear to have peaked and are turning lower. Additionally, as we approach key resistance levels, short-term speculative traders attempt to buy the top, short at these key resistance levels, and then get liquidated, creating a pseudo-negative gamma effect that pushes Bitcoin higher.

Secondly, there is the lack of liquidity in Asian markets. According to Reuters, the Bank of Japan may raise its benchmark interest rate above zero this month, and the Japanese Nikkei and Australian ASX indexes fell 2%. Some analysts have long warned that the Bank of Japan is a major source of uncertainty in traditional and cryptocurrency markets. Nevertheless, due to the recent large influx of funds into U.S.-listed Bitcoin spot ETFs, which has caused an imbalance in supply and demand, coupled with the Bitcoin halving, the market consensus is that any Bitcoin decline is likely to be short-lived.

Finally, the institutional interest in Bitcoin ETFs launched in the United States is increasing. According to Dune data, since the launch of Bitcoin ETFs, ETF issuers have accumulated 4.06% of the current Bitcoin supply, with total on-chain holdings exceeding $56.9 billion. At this rate, ETFs are expected to absorb 8.65% of BTC supply each year.

According to HODL15 Capital data, spot Bitcoin ETFs accumulated a total of 33,000 BTC (about US$2.3 billion) last week, including Grayscale's GBTC fund, which saw outflows of more than 10,200 BTC.

Digital asset management company Bitwise said in an investment report sent to investors on March 9 that it expects that by the end of June, more institutions representing "trillions of dollars in assets" will be ready to buy Bitcoin spot ETFs.

Meanwhile, despite new highs in Bitcoin prices, Bitcoin "whales" continue to hold Bitcoin. As of March 9, the number of unique addresses holding at least 1,000 BTC has risen to 2,107. However, this is still lower than the record of 2,489 addresses set in February 2021, when Bitcoin was trading at more than $46,000.