The crypto scene continues to remain so hot that bitcoin is hitting one new high after another. It surpassed $72,700 on Monday. This was initially driven by the approval of spot bitcoin ETFs, but is now being pushed higher ahead of a “halving” event, which will limit the amount of new supply put into circulation from bitcoin miners.
Bitcoin has increased 9.5% in the past seven days and is up 50% on the month, according to CoinMarketCap data. The total crypto market cap across all tokens has increased 10% on the week to $2.71 trillion, with bitcoin making up 52.7% of that amount.
There is, of course, no way of telling how high bitcoin can rise during the current bull frenzy. While many are feeling the hopium, there’s at least one indicator that thinks we’re nearing the top of the highs, with price dips to quickly follow.
The CoinMarketCap Crypto Fear & Greed Index is in “extreme greed” territory at 89.12 points, up from “neutral” at 59.3 points, in early February. The index measures price and trading data of the biggest cryptocurrencies, with its user behavior data to measure crypto market sentiment from 0-100. When the index is closer to zero, investors have over-sold their positions “irrationally,” compared to when the value is closer to 100, the market is likely to face a correction.
With that said, bitcoin has remained the main focus for retail and institutional investors, with $2.6 billion inflows on the week, aka money being put into the asset, and $9.9 billion year-to-date, according to CoinShares’ Digital Asset Fund Flows Weekly Report. Ether, the second-largest cryptocurrency, isn’t benefiting directly from any bitcoin enthusiasm hype. Its inflows this past week are down $2.1 million, although it is up $135 million year-to-date.
CoinShares Volume 173: Digital Asset Fund Flows Weekly Report. Image Credits: CoinShares
Regardless of how high investors will push bitcoin up ahead of the bitcoin halving event, which is expected to transpire in mid-April and happens every four years, there’s no reason to believe that what goes up won’t come down. Again. In previous cycles, bitcoin halvings increased demand and pricing for the cryptocurrency.
The last bitcoin halving was on May 11, 2020 and drove its price up about 600% from around $9,000 to $63,000 by the April 2021 mark. Then it fell about 50% within three months, signaling renewed volatility for the asset.