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Crypto Market Hits New Heights, Fueled by Bitcoin Rally
Bitcoin, the largest cryptocurrency, surpassed $93,000 by November 13, 2024.* According to CoinGecko, the total market capitalization of crypto assets reached all-time high of $3.2 trillion on November 14, 2024, exceeding even the 2021 rally when investors flocked to speculative assets during the pandemic. Donald Trump, a proponent of minimal market regulations, has promised to apply this approach to cryptocurrencies, which in many countries face harsh regulations, taxes, or outright bans. This led to a market frenzy, including in the digital realm, following his presidential election victory.
Bitcoin ETFs Surpass Gold ETFs
On November 6, 2024, the day after the U.S. presidential elections, BlackRock's iShares Bitcoin Trust (IBIT) achieved a record trading volume of $4.1 billion. On the same day, its net asset value surpassed that of the iShares Gold Trust (IAU), which tracks the spot price of gold, reaching $33.2 billion. This milestone is particularly impressive given that IAU has existed for nearly 20 years, whereas IBIT was launched in early 2024. By November 13, 2024, IBIT’s volume grew to $42.3 billion, continuing its strong rally. In contrast, IAU reached its historical peak on October 30, 2024, benefiting from pre-election political uncertainty, which favoured "safe-haven" assets like gold.
Source: investing.com*
IBIT Outperforms Prestige Stocks
By the end of October 2024, IBIT had become one of the top five largest ETFs globally in terms of capital inflows. These massive trading volumes indicate its widespread acceptance among traditional investors, bolstered by BlackRock's reputation and increasing interest in cryptocurrencies through funds. Trading volumes for IBIT have surpassed those of major stocks such as Berkshire Hathaway, Visa, and Netflix.
Uncertainty Regarding Interest Rates
The cryptocurrency rally was also fueled by new data on U.S. September inflation, which rose slightly from 2.4% to 2.6%, aligning with expectations. However, the market rally cooled somewhat after the release of a higher-than-expected Purchasing Manager Index (PMI) rate, measuring production costs. This, coupled with remarks from Fed Chairman Jerome Powell, led to uncertainty about the likelihood of further interest rate cuts in December, with the probability now below 50%.
Multiple Bitcoin ETFs Available
Although IBIT is by far the largest Bitcoin fund in the world, InvestingFox offers additional Bitcoin ETF options via CFDs. One of these is the ProShares Bitcoin Strategy ETF (BITO), which tracks Bitcoin futures contracts, meaning its price may include costs related to "rollover" (the difference between the sale and purchase price of contracts after expiration). Another option is the European ETC Group Physical Bitcoin (BTCE), whose price is backed by physical Bitcoin, held in collectible coins worth double the market value of the digital token.
Conclusion
2024 has been a landmark year for Bitcoin and cryptocurrency ETFs. IBIT has emerged as a symbol of growing recognition for cryptocurrencies in traditional investment circles. With assets exceeding $40 billion and trading volumes surpassing those of prestigious stocks, it has shown that Bitcoin is not just a speculative asset but a serious alternative to traditional investment products. However, challenges such as regulation, volatility, and geopolitics remain, shaping its future in the global economy. If current trends persist, we can expect even greater integration of cryptocurrencies into traditional financial structures.
David Matulay, analyst of InvestingFox
* Data relating to the past are not a guarantee of future returns.
Warning! This marketing material is not and must not be understood as investment advice. Data relating to the past are not a guarantee of future returns. Investing in a foreign currency can affect returns due to fluctuations. All securities transactions can lead to both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.
Sources:
https://www.blackrock.com/us/individual/products/333011/ishares-bitcoin-trust
https://www.blackrock.com/us/individual/products/239561/ishares-gold-trust-fund#/
https://cointelegraph.com/news/blackrock-bitcoin-etf-sees-biggest-volume-day-ever-4-1-billion-traded
https://x.com/EricBalchunas/status/1854281747082477696/photo/1
