Bitcoin Hits All-Time High Above $69,000, Then Falls 4%

Bitcoin hit a new all-time high for the first time in more than two years as this year’s rally — fueled by excitement surrounding a bitcoin ETF and the upcoming halving event — accelerated.

The price of the cryptocurrency topped $69,210 on Tuesday morning before retreating, according to Coin Metrics. It last traded 4% lower at $64,665.68. The leading crypto reached its previous record high of $68,982.20 on November 10, 2021 — about a year before the catastrophic failure of FTX plagued the crypto industry in what some are calling a Lehman Brothers crypto moment.

“Bitcoin’s retracement of its all-time high shows again that it will never go away,” said Alex Thorne, head of research at Galaxy Digital. “In its 15 years of existence, Bitcoin has seen four 75% [plus] absorptions and came roaring back every time.”

Clara Medali, research director at crypto data provider Kaiko, echoed that sentiment, saying a new record is an “important psychological milestone” and “demonstrates crypto’s remarkable ability to recover and continue to persevere despite major headwinds.” However, it “doesn’t have a very significant impact on the pace of innovation in the industry,” she added.

“Bitcoin becomes more useful when it becomes more valuable,” Thorne added. “With higher market caps and daily float, it can support larger allocations. Bitcoin volatility has consistently decreased over time, allowing allocations to take larger position sizes.”

Since early February, investors have been watching key themes in the Bitcoin narrative drive its price higher.

Catalysts driving the cryptocurrency’s surge include US spot bitcoin ETFs, which began trading earlier this year, along with the tightening supply of bitcoin ahead of the late-April “replenishment.” This event is intended to create a shortage event around the asset. The leading crypto’s uptrend accelerated this week.

The new record is a triumph for an industry that has long suffered from reputational and regulatory risk that seemed at its worst just two years ago, when failed crypto lenders dragged down crypto investors and crypto exchange FTX collapsed. In late 2022, as traders tried to gauge the potential extent of FTX contagion, Bitcoin fell to a two-year low. The cryptocurrency has fallen 64% this year and has been struggling to prove its legitimacy ever since.

“The odds have always been against bitcoin,” Thorne said, citing skeptics who called it a “bubble” and compared it to the “tulip craze” in Holland in the 1600s. “People have shown over and over that they want a decentralized, programmatic , a scarce digital currency.”

It could also signal the start of a new wave of retail investors re-engaging in the crypto market, Needham analyst John Todaro said.

“Retail interest is often driven by momentum, and all-time highs are a major driver for even more investment,” he told CNBC. Additionally, “this could lead to more capital flows, ironically, into altcoins that are starting to look cheaper comparatively,” he said.

Crypto, led by Bitcoin, saw a strong recovery in 2023, advancing 157%. The digital asset initially got a boost from the US regional banking crisis and was caught in the tailwind by speculation at the time that ETFs tracking bitcoin prices would receive approval from the Securities and Exchange Commission.

Some investors remain skeptical about the fledgling crypto asset class, how to value it, or whether it has any intrinsic value. However, US spot bitcoin ETFs have brought legitimacy and become wildly popular, with BlackRock’s iShares Bitcoin Trust (IBIT) transferring $10 billion in assets under management last week.

However, with Bitcoin on a hot streak, investors entering the market here should tread carefully as unrealized profit margins approach extreme levels.

“The market is positioned for a sharp correction, probably between 10% and 20%,” said Ed Tolson, CEO and founder of crypto hedge fund Kbit. “Any significant move down will lead to cascading liquidations in the crypto permanent swaps markets where retail has built up long leveraged positions. This will result in very high financing rates. Over the next few quarters, we expect Bitcoin to perform well, but with sharp corrections along the way.”

Oppenheimer’s Owen Lau agreed.

“The rise is so rapid that we are cautious about a correction,” he said. “But longer term, there are still catalysts supporting positive price action.”