Bitcoin surpasses $56,000 benchmark, uplifts crypto market in latest rally

Bitcoin, the world’s largest cryptocurrency by market cap, extended a rally in Asia trading on Tuesday, reaching a two-year high of over $56,000 and uplifting the broader crypto market amid positive market developments and buying from crypto bulls.

The price of bitcoin increased over 10% within two days, according to data from CoinMarketCap, after crypto investing and software firm MicroStrategy disclosed a purchase of about 3,000 bitcoins for $155 million on Monday.

MicroStrategy, based in Virginia, is currently the largest publicly traded owner of bitcoin. The company reported a holding of about 190,000 of the cryptocurrency tokens earlier this month, which would be worth over $10.5 billion today.

According to Greta Yuan, head of research at digital asset platform VDX, the market was “encouraged by crypto bulls such as MicroStrategy” as well as a “new record of Bitcoin ETF inflows.”

Most of the cryptocurrency market experienced a lift from the latest rally. Ethereum, the second-largest cryptocurrency by market cap, reached a multi-month high above $3,200.

Crypto-related equities also surged in trading in the U.S. MicroStrategy and San Francisco-based crypto exchange company Coinbase both leaped over 16% on Monday and continued gaining in aftermarket trading.

The two crypto-related companies have seen their stock prices grow 200% over the past year. 

Speaking to CNBC last week, Alesia Haas, Coinbase’s CFO, attributed the company’s recent strong financial results to the regulatory approval of spot bitcoin ETFs in the U.S. last month, which had triggered renewed fervor surrounding the cryptocurrency. 

According to VDX’s Yuan, the surging price of bitcoin also reflects the “bullish sentiment of investors, especially in the U.S.,” ahead of an upcoming “bitcoin halving” set for the second half of April. 

A bitcoin halving event occurs every four years, with the reward for bitcoin mining — the process by which transactions are digitally verified on the blockchain — cut in half, thus reducing the rate at which new bitcoin tokens are created and lowering the amount of new supply available.

“As Bitcoin’s halving draws closer, investors are rushing to the best positioning for the event. The new record of inflow volume of Bitcoin ETFs is another confidence check for bullish investors,” Yuan added. 

The strong bitcoin performance also comes amid the dollar trading down on Monday and Tuesday. Markets anticipate U.S. economic data this week that could signal how soon the Federal Reserve may begin cutting interest rates.

Bitcoin prices and the U.S. dollar index have historically shown an inverse correlation.