Bitcoin briefly surpassed $74,000 for the first time in a month, driven by institutional demand and positive market sentiment.
On March 4, Bitcoin's price briefly exceeded $74,000, its highest point in a month, before settling around $72,090, reflecting a 6% increase within 24 hours.
Ethereum also saw gains, rising 7.5% to $2,113 after reaching a local high above $2,200 before a slight pullback.
Among the top cryptocurrencies, Dogecoin and Zcash led the way with notable increases. Dogecoin climbed over 8% to surpass $0.09, while Zcash gained 9%, reaching $235, recovering from its February lows.
K33 Research analysts pointed out that Bitcoin's recent performance comes after a prolonged period of market declines, marking a potential recovery phase.
Nick Pakrin, co-founder of Coin Bureau, emphasized the role of institutional demand in Bitcoin's resurgence, stating, “During the recent crisis, Bitcoin outperformed the Nasdaq, S&P 500, and gold. This divergence is a positive signal.” He noted that since March 2, inflows into spot Bitcoin ETFs have surpassed $680 million, indicating that large investors are seeking refuge in cryptocurrency amid geopolitical tensions.
The rise in cryptocurrency values has positively impacted related stocks as well:
Sean Yang, chief analyst at MEXC Research, remarked that Bitcoin's recent retest of the $73,000 level might indicate a price bottom. He noted the rise in the fear and greed index from 8 to 29 points and sustained high inflows into Bitcoin ETFs over three days, suggesting a possible trend reversal, although local pullbacks could occur as traders take profits.
Yang also discussed the implications of miners shifting focus to the more lucrative artificial intelligence sector, which could lead to a coin shortage while simultaneously posing risks to the stability of the Bitcoin network.
“If transactions are processed by only a few pools, it will harm Bitcoin's status as a payment instrument,” he warned.
He further noted that while corporate investors have been withdrawing from ETFs, retail investors have been the primary supporters of Bitcoin's price. Yang believes that a return of institutional investors would enhance market liquidity, potentially stabilizing prices above $60,000 and aiming for $100,000 by the end of Q2.
Despite the recent upswing, many traders remain cautious, as evidenced by the elevated premium on put options compared to call contracts. This indicates a bearish sentiment, reflecting concerns following the market crash in early February.
Data from Glassnode shows that 43% of Bitcoin's market supply is currently at a loss, an increase from 30% at the end of January. This situation raises fears that as prices recover, some investors may sell off their holdings, creating resistance to further price increases.
Mining profitability has also reached historical lows, prompting public companies to liquidate Bitcoin reserves and pivot towards artificial intelligence operations. The hash price index has dropped to $30 per TH/s per day from $39 three months ago.
A critical resistance level for Bitcoin is around $76,000, which reflects the average purchase price by the firm Strategy, holding 720,737 BTC. Maintaining prices below this threshold benefits certain market players, allowing them to issue new shares for cryptocurrency purchases without impacting current investors.
Market sentiment remains cautious, with the cryptocurrency sentiment index rising from 10 to 22 points but still indicating extreme fear. The road to recovering Bitcoin's January peak of $78,700 may be longer than anticipated, with a breakthrough at this level necessary to regain momentum.
Earlier this month, VanEck CEO Jan van Eck noted that Bitcoin has approached a local bottom, hinting at potential future recovery.
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