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Ripple CEO Brad Garlinghouse trended on social media with his prophecy that cryptocurrency market capitalisation would hit the $5 trillion mark by the yearend. Almost in the wake of Garlinghouse’s prediction, cryptocurrency hit the $2.7 trillion mark on Monday in terms of overall capitalisation while Bitcoin, widely regarded as the most valuable cryptocurrency in the world, sold at over $70,000.
The burgeoning value of cryptocurrency, particularly Bitcoin, owes itself to several factors, notably the introduction of US spot Bitcoin exchange-traded funds (ETF), Garlinghouse told CNBC. He added that ETFs were drawing interest for the first time from institutional investors this year.
Bitcoin saw a dramatic surge in March 2024 when it scaled a record high of $72,739. Heavy inflow of cash into new spot ETFs apart, data from London Stock Exchange Group (LSEG) showed that capital inflow into the 10 biggest spot bitcoin ETFs of the US had managed to touch the $2-billion mark despite hitting a fortnight’s low in early March, according to Reuters.
A factor that has contributed to Bitcoin’s current rise is also the prediction that the US Federal Reserve might soon cut interest rates. The buzz has been gaining ground ever since Federal Reserve Chair Jerome Powell asserted recently that bringing down interest rates “at some point this year” was a likely course of action.
So far, understanding or predicting Bitcoin trends has been a tricky proposition because, at less than two decades, the cryptocurrency is yet to establish a steady performance pattern. For instance, Bitcoin had crashed within months following a record high in November 2021.
Among vital upcoming developments that could have an impact on Bitcoin is the halving events, set to take place on April 20 this year. The pre-programmed events, held every four years, aim at controlling the rate at which the new supply of coins is brought into circulation, which, along with halving of mining rewards, works at slowing down Bitcoin prices.