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The price shot up above the $71,000 threshold in a strong rally ahead of the highly anticipated fourth halving. Demand for the original cryptocurrency also increased amid brisk activity in the decentralized finance (DeFi) sector.
Elsewhere, Ethena's ENA token surged this week following its airdrop, and the announcement of a new stablecoin along with the foundation's proposal to reduce the number of newly minted ETH units has fueled positive sentiment across the market .
Bitcoin's upcoming halving is worrying investors and analysts as historical data shows mixed immediate impact but overwhelmingly positive long-term impact. Past halvings have resulted in price increases ranging from 292% to over 8,000%, raising questions about whether this trend will continue.
“Bitcoin’s halving event has been a precursor to significant market moves in the past,” said a Kaiko analyst. “While the past is not always a perfect indicator, the anticipation itself can create significant volatility and interest.”
Exchange traded funds (ETFs) have also come into the spotlight as they now account for over 4% of the total supply of Bitcoin. The trend signals growing acceptance of cryptocurrencies among traditional investors. These funds offer individuals an easy way to participate in the cryptocurrency markets without having to hold the digital currency directly.
The impact of ETFs and the halving event could combine to put further pressure on the already limited supply of Bitcoin, which could ultimately lead to higher prices.
Despite the excitement, the ETF sector has seen mixed inflows, with large outflows from Grayscale's GBTC. However, the overall trend remains positive as demand for Bitcoin exposure continues among both institutional and retail investors.
In the DeFi space, Ethena's ENA token bucked the general trend of post-airdrop selloffs and traded above $1.1, up nearly 97% from its launch day value.
Additionally, both Bitcoin and Ethereum recorded all-time highs in open interest in the derivatives markets, indicating a bullish outlook among traders. However, the crypto market remains unpredictable as many factors influence price movements beyond historical patterns and current developments.
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