The cryptocurrency market experienced a surge today, as the global market capitalization rose by 5.8% to reach $2.51 trillion on March 4. This movement resulted in Bitcoin’s (BTC) market dominance increasing to 53.3%, as the pioneer cryptocurrency’s market capitalization reached a new all-time high.
Bitcoin (BTC) saw a rally of 8.5% over the past 24 hours, reaching an intra-day high of $68,602 on March 4. Other top-cap altcoins such as Ether (ETH), Cardano (ADA), XRP (XRP), and Dogecoin (DOGE) also experienced a rally.
Let’s examine the key factors that are driving the cryptocurrency market today.
Bitcoin’s market capitalization reaches an all-time high
Bitcoin’s market capitalization hit a new record high against the dollar. The rally of BTC to $68,602 on March 4 resulted in its total market value reaching a high of $1.33 trillion. The last time BTC’s market cap reached $1.3 trillion was over two years ago, on November 10, 2021, when it reached $68,990.
A cryptocurrency’s market capitalization is calculated by multiplying the number of coins in circulation by the current spot price of the coin. At the time of writing, there were 19,644,550 BTC in supply, according to data from CoinMarketCap.
Bitcoin’s price rally has been attributed to the upcoming supply halving, which is expected to reduce miner rewards by 50%. CoinMarketCap’s data shows that there are 6,870 blocks until the halving, which is approximately 48 days away.
The approval of spot exchange-traded funds (ETFs) in the United States has also contributed to Bitcoin’s price growth, as the ETFs continue to attract more capital.
Record inflows into crypto products
BTC’s price continued to rise towards its all-time high, fueled by increasing inflows into spot Bitcoin ETFs.
According to CoinShares’ Digital Asset Fund Flows Weekly Report, crypto products recorded their second-largest weekly inflow, totaling $1.84 billion. This was accompanied by a record $30 billion in trading volume, which accounted for 50% of global Bitcoin daily trading volumes on trusted exchanges, as stated in the report.
The report also mentioned that Bitcoin accounted for 94% of the inflows, amounting to $1.72 billion, with U.S.-based funds dominating with net inflows totaling $1.88 billion.
This influx of capital into Bitcoin comes at a time when there have been increasing outflows from the incumbent Grayscale Bitcoin ETF, GBTC. In March, GBTC’s outflows reversed their trend, resulting in a total outflow of $1.46 billion over the past week.
While institutional capital continues to flow into Bitcoin, there has also been an increase in short investors with a further $22 million inflow, according to CoinShares.
Crypto market rally leads to significant liquidations
The crypto market rally has led to a wave of short position liquidations, totaling over $348.2 million within 24 hours. In the past hour alone, there have been $26.9 million short leverage position liquidations.
Bitcoin short liquidations accounted for the majority with $107.71 million in total shorts wiped out, followed by Ether with $41.92 million in liquidations.
Despite the losses for short-sellers, there has been a significant increase in open interest in the crypto market, with $3 billion added in the past 24 hours, according to crypto trading analysis platform Coinalyze.
Furthermore, there is a sense of optimism surrounding the spot ETFs and the upcoming Bitcoin halving, resulting in increased positive sentiment. Alternative.me’s Crypto Fear and Greed Index now indicates “extreme greed.”
With increased institutional capital flows into crypto funds, the potential for a spot Ether ETF, and the approaching Bitcoin halving, there are strong indications that the bull market is underway.
Please note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.