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Bitcoin has surprisingly surged over $63,000, a dream unachieved in over two years, fueled by market optimism, heightened trading activity, and key macroeconomic shifts.Â

Unpacking the Surge

Bitcoin’s ascent to $63,000 has been propelled by a 42% price rally in February, making it the largest monthly gain since December 2020.Â

The capital inflow into the market because of the recently approved U.S. spot Bitcoin ETFs has played a pivotal role in fueling this surge. Notable ETFs, including those offered by Grayscale, Fidelity, and BlackRock, have witnessed a surge in trading volumes, underscoring the growing interest in cryptocurrency as an asset class.

Traders have strategically entered the Bitcoin market ahead of the scheduled halving event in April. The halving process, designed to slow the release of the cryptocurrency, historically triggers significant price rallies.Â

Simultaneously, the possibility of the Federal Reserve rate cuts in the coming months has heightened investor appetite for higher-yielding and more volatile assets, further supporting Bitcoin’s upward trajectory.

“Bitcoin is being driven by the support of consistent inflows into the new spot ETFs and the outlook for April’s halving event and June’s Fed interest rate cuts,” noted Ben Laidler, global markets strategist at eToro.

The Great ETF Impact

The fear and greed index, a key indicator of investor psychology, surged to 82, signalling extreme greed and reaching its highest level in over a year.Â

While such levels often precede market corrections, they also indicate an increased appetite for risk and speculative investments. The heightened interest in Bitcoin ETFs is evident in the impressive $3.8 billion in trading volume and the market capitalization inching towards $45 billion.

Joseph Edwards, head of research at Enigma Securities, highlighted the accelerated interest in ETFs, suggesting that advisors are proactively introducing clients to these investment vehicles. This unexpected surge in ETF activity, often referred to as the “ETF effect,” has surpassed expectations, with trading volumes surpassing those of major companies like Apple, Microsoft, and Nvidia.

Bitcoin’s recovery after a post-ETF fallout underscores its resilience, with a strong rebound defended by the 100-day moving average. The recent breakout above $50,000 and consolidation near $53,000 set the stage for another leg higher in Bitcoin’s price.Â

All in all … 

While optimism prevails, there are huge speculations that there will be a steep correction post-halving. Nonetheless, the ongoing rally raises the possibility of Bitcoin revisiting its 2021 highs, adding to the dynamic and ever-evolving narrative of the cryptocurrency market.