Bitcoin Surges Past $57,000 as Institutional Investors Drive Rally

Bitcoin reached a two-year high on Tuesday, marking its biggest two-day rally of the year, as signs emerged of large institutional investors entering the cryptocurrency market. The surge also propelled smaller rival ether above $3,200 for the first time since 2022.

Bitcoin's rally of more than 10% over two sessions was supported by Monday's announcement from crypto investor and software firm MicroStrategy that it had recently purchased about 3,000 bitcoins for $155 million.

The cryptocurrency has also benefited from the approval of bitcoin-owning exchange-traded funds (ETFs) in the United States. The approval led to a spike in trading volumes in several ETFs and a rally in crypto-linked firms, contrasting with a nervous broader market sentiment.

Bitcoin was last up 4.7% at $57,232, while ether reached as high as $3,290, its highest level since April 2022.

Justin d'Anethan, head of partnerships in Asia at Keyrock, a digital asset market maker, noted, "There's only so much supply... but the demand unleashed by the U.S. spot ETFs seems to be relentless."

The upcoming bitcoin halving event in April is also a major incentive for investors. This event is designed to slow the release of bitcoin by cutting the reward for producing tokens in half. Bitcoin has gained 32% in value so far in February, heading for its largest one-month gain since January 2023.

In addition to institutional interest, social media platform Reddit recently disclosed that it had invested a small portion of its excess cash reserves in bitcoin, ether, and matic, the native token of the Polygon network, as a form of payment for sales of certain virtual goods.

Ether has risen even faster than bitcoin this month, heading for a 41% gain. Market participants are also anticipating regulatory approval of spot ether ETFs, which has further boosted the price.

However, regulatory experts and industry sources caution that the U.S. Securities and Exchange Commission may move cautiously on the filings for spot ether ETFs, despite approving bitcoin ETFs. Nonetheless, crypto stocks have also enjoyed a boost, with shares of crypto exchange Coinbase up 5.8% and bitcoin miners Marathon Digital and Riot Platforms climbing 5.7% and 0.7%, respectively. The largest bitcoin ETF, Grayscale Bitcoin Trust, was last up 4.4%.