Bitcoin returns to $61k after closing in on new all-time high

Bitcoin took a sharp downward turn after nearly hitting $64,000 Wednesday afternoon and approaching new record highs.

The largest cryptocurrency lost 5% in a matter of minutes before paring losses and hovering around $60,600 at time of publication. $65,000 is the next key resistance level, analysts say.

Even with the dip, bitcoin (BTC) remains up more than 7% this week and 44% over the month, an increase analysts attribute to a combination of tailwinds: increased bitcoin ETF demand, anticipation surrounding the next bitcoin halving cycle, scheduled for this April, and favorable macroeconomic conditions.

Bitcoin ETFs on Tuesday clocked more individual trades than both SPY, S&P 500’s top ETF, and the Nasdaq-tracking QQQ, according to Jim Bianco, president and macro strategist at Bianco Research.

“The bulk of the trades are small, which suggests that retail is buying, given the size of the net inflows ($580 million, $520 million from BlackRock alone),” said Noelle Acheson, author of the Crypto is Macro Now newsletter.

More than $585 million in long and short bitcoin positions have been liquidated in the past 12 hours, according to data from CoinGlass.

Bitcoin’s rally coincided with a historic day for the newly-minted spot bitcoin ETFs. BlackRock’s bitcoin ETF — after breaking its trading volumes record each of the last two days — has set a new record for net inflows Tuesday of $520 million, according to BitMEX Research. The total broke the previous daily net inflow high of $493 million, which was also set by IBIT on Feb. 13.

Ether (ETH) extended its own rally Wednesday, hitting around $3,470 before paring gains to hover at the $3,200 level.

Equities, on the other hand, faltered, with the S&P 500 and Nasdaq Composite indexes trading 0.1% and 0.5% lower at time of publication.

Federal Reserve Open Market Committee Member Raphael Bostic on Wednesday did little to calm markets when he said inflation is a continuing issue and central bankers will proceed with policy changes slowly.

“The hard landing vs. soft landing debate remains very important for investors for one main reason: An economic slowdown is one of the few events that could erase all of the October-present gains in stocks,” said Tom Essaye, founder of Sevens Report Research.

Updated Feb. 28, 2024 at 1:53 pm ET: Modified headline to reflect BTC price.

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