Bitcoin marked its best monthly performance since mid-2020 in February, reaching a level within arm's reach of the fall 2021 record high at 64,000. Funds continue to pour into Securities and Exchange Commission-approved spot ETFs since early January, fueling the market's fervor. The anticipated halving or doubling of mining costs in April adds more fuel to the fire. As a result, the cryptocurrency has overshadowed all assets in financial markets, with its rapid rally becoming the hallmark of the beginning of 2024.

The launched iShares Bitcoin Trust, a specialized exchange-traded fund by BlackRock, witnessed a record net capital inflow of $612 million in a day as BTC/USD approached its historical high. This surge elevated the total figure for all ETFs with Bitcoin as the underlying asset to $673 million. Even at the start on January 11, there was no such interest in new products, which then reached $655 million.

Dynamics of capital inflows in iShares Bitcoin Trust from Black Rock

Thanks to the overwhelming demand, iShares Bitcoin Trust's assets reached an impressive $10 billion within seven weeks. This represents the fastest ascent for ETF assets to this level among all previously existing specialized exchange-traded funds. For comparison, the SPDR Gold Shares, focused on gold and launched in 2004, took over two years to reach this milestone. Currently, its assets exceed $54 billion.

According to Galaxy Digital Holdings, the current demand is predominantly speculative. Unlike 2021, when large institutional investors participated in the BTC/USD rally, the primary players now are small investors actively utilizing leverage, which may come at a cost. The company predicts a Bitcoin correction down to 50,000, causing considerable pain for those who fail to exit their long positions in time.

The ascent of the leading cryptocurrency wouldn't be as impressive without the limited supply. According to Glassnode, more than half of all previously issued tokens have not moved for over two years. However, miners are starting to show activity as winter comes to an end. JP Morgan's research indicates that the average mining cost will double due to the halving, from the current 26,500 to 53,000. Not all producers can afford to continue operating, and as a result, they will exit the market, reducing costs by approximately 20% to 42,000. BTC/USD quotes will aim for this price during the downward correction.

Dynamics of Bitcoin and Mining costs

Thus, cryptocurrency prices adhere to the laws of supply and demand. Additionally, a high global risk appetite against the backdrop of record highs in U.S. stock indices creates a favorable external environment for Bitcoin.

Technically, an inside bar has formed on the BTC/USD daily chart. It signifies uncertainty, allowing for both buying from the level of 63,650 and selling from 60,500. In such conditions, it makes sense to set pending orders and patiently wait for them to trigger.