Bitcoin Surges Past $60K Amid ETF Frenzy
Bitcoin ETF Investments Drive Price Surge
Bitcoin (BTC) has recently hit a milestone, surpassing the $60,000 mark, a level not seen since November 2021. This surge can be attributed to the increasing investments in exchange-traded funds (ETFs). Over the past couple of days, ETFs have witnessed a substantial net inflow of $1.1 billion. The demand for Bitcoin ETFs has exceeded the daily production of Bitcoin by miners by about ten times.
Bitcoin Mining Stocks Underperform
An interesting trend has emerged amidst this upward movement – the underperformance of Bitcoin mining stocks compared to the cryptocurrency itself. In the last 120 days, particularly following the heightened probability of ETF approvals and the launch of ETFs on January 10, Bitcoin mining companies have seen their stock prices outpace the gains made by Bitcoin. For instance, Cleanspark and Marathon Digital have experienced significant surges of around 380% and 250%, respectively, in contrast to Bitcoin’s 70% price increase during the same period.
Bitcoin Surges Above $60,000
Despite the previous trend, on a day when Bitcoin soared above $60,000, the scenario changed. The flagship cryptocurrency surged by 6%, outperforming mining companies like Riot Platforms and CLSK, which experienced declines of 7.5% and 10%, respectively. Analysts note that Bitcoin tends to draw liquidity away from mining stocks during such rapid price rallies. Retail traders often prioritize Bitcoin over mining stocks on such days.
Bitcoin Miners’ Future Prospects
Analysts anticipate that Bitcoin miners will exhibit higher volatility over a reasonable timeframe, such as a micro BTC cycle. This cycle could encompass the period before the ETF rally, during the ETF rally, or throughout the entire BTC cycle, which typically lasts 18-24 months. They emphasize that this higher volatility is not a daily occurrence but rather a broader trend to watch for.
