Crypto-related stocks and funds rallied on Monday after bitcoin briefly rose above $50,000 for the first time since December 2021, as demand for recently launched spot bitcoin ETFs remains robust.
The largest cryptocurrency (BTCUSD) has risen 13% over the past seven days, according to CoinDesk data. It has climbed 11% so far this year, building on a more than 150% gain in 2023. However, bitcoin is still down roughly 28% from its all-time high of $68,990, reached in November 2021.
Among spot bitcoin ETFs, Grayscale Bitcoin Trust GBTC rose 5.6% to close at $44.86 on Monday, while BlackRock's iShares Bitcoin Trust IBIT ended up 5.6% to $28.66, according to Dow Jones Market Data. Fidelity Wise Origin Bitcoin Fund FBTC gained 5.7% to close at $44.02, and ARK 21Shares Bitcoin ETF ARKB finished up 5.7% at $50.31.
Bitcoin futures ETFs also climbed on the day. ProShares Bitcoin Strategy ETF BITO gained 5.7% to $23.82, and Valkyrie Bitcoin and Ether Strategy ETF BTF rose 5.6% to $15.61.
Meanwhile, crypto exchange Coinbase's shares $(COIN)$ ended 3.7% higher to $147.31, while MicroStrategy's shares $(MSTR)$ finished up 11% at $717.52. Crypto miner Riot Platforms's stock $(RIOT)$ finished 9.4% higher at $15.92, and Marathon Digital Holdings's shares $(MARA)$ ended 14.2% higher at $27.28. Ebang International Holdings's shares $(EBON)$ rose 7.9% to $11.11.
Why bitcoin rallied
The latest bitcoin rally appears to be driven by spot-market demand, which has driven a significant spike in the crypto's trading volume, according to Sean Farrell, head of digital-asset strategy at Fundstrat. "A substantial portion of this volume is likely entering the market via spot ETFs chasing the positive weekend price action," Farrell wrote in a Monday note.
Outflows from Grayscale Bitcoin Trust, the largest spot bitcoin ETF, have been slowing, while demand for rival bitcoin ETFs remains robust, according to Mark Connors, head of research at digital-asset manager 3iQ.
Meanwhile, some investors are also seeking bitcoin as a potential safe haven amid geopolitical uncertainty, Connors said in an interview.
"We have 60+ major elections globally in 2024 in an anticipatedly volatile geopolitical environment," according to Thomas Perfumo, head of strategy at Kraken. "These challenges drive the movement of capital to high-quality, store-of-value assets like bitcoin," Perfumo wrote in emailed comments.
Yet bitcoin's price remains highly volatile relative to traditional store-of-value assets like gold, and many believe there's still not enough evidence that it can be used as a safe haven.
What's next
Connors is now eyeing a range of $60,000 to $65,000 for bitcoin's next level. He still expects the crypto to reach up to $160,000 by the end of 2024 and $350,000 by the second half of 2025.
Greg Magadini, director of derivatives at Amberdata, said he is expecting bitcoin's market capitalization to rise above $1 trillion this week. The crypto's market cap stood at around $977 billion on Monday, according to data from CoinMarketCap.
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