Bitcoin regains $1 trillion market cap after a tumultuous two years for crypto

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Bitcoin has regained its $1 trillion market capitalization on Wednesday, as the crypto industry works to recover from a tumultuous two years.

Interest in bitcoin has grown since a new flock of exchange-traded funds gained regulatory approval in January. Traders also have been looking forward to the so-called “halving” or “halvening” event, a move that helps control bitcoin supply, which is expected in April.

Read: What is the bitcoin halving and which day does it happen?  

The crypto
market cap last topped $1 trillion in November 2021, according to data from CoinMarketCap. 

Cryptocurrencies plunged in value in 2022 after the collapse of a major “stablecoin” known as TerraUSD, but also as the industry faced a wave of regulatory actions and the collapse of crypto exchange FTX.

Bitcoin went up 6.4% over the past 24 hours to above $52,000 briefly on Wednesday, after a pullback on Tuesday, according to CoinDesk data. It rose 17% so far this year, but is still down about 25% from its all-time high of $68,990 reached in November, 2021. 

Bitcoin’s recent strength has been largely driven by inflows into ETFs that invest directly in crypto, according to Steven Lubka, head of private clients and family offices. Outflows from Grayscale Bitcoin Trust
the largest spot bitcoin ETF, have been slowing, while demand for rival bitcoin ETFs remains robust. 

“People may also be buying as they are encouraged by how resilient bitcoin price has been,” Lubka said in a call. 

The setup for bitcoin seems “very bullish” and the coin is likely to reach a new all-time high in the coming months, Lubka said. Historically, bitcoin tends to see price appreciation at and after the time of halving, but rarely with significant gains months before halving, according to Lubka. 

Bitcoin halving refers to a process where block rewards given to crypto miners are cut in half after every 210,000 blocks are mined, so far occurring about every four years. The next event is expected to happen in April this year. 

To be sure, created in 2009, bitcoin has only gone through three halvings in its history. 

U.S. stocks also rose on Wednesday, with the Dow Jones Industrial Average
up fractionally, after ending sharply lower on Tuesday. The S&P 500
rose 0.3% and the Nasdaq Composite
gained 0.5%, according to FactSet data.

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