Why Major Cryptocurrencies Soared This Week

Several major cryptocurrencies rallied this week amid multiple potential catalysts including strong net inflows into bitcoin ETFs, notable new registration filings for spot Ether ETFs, and an anticipated "bitcoin halving" event in early April.

When all was said and done as of the close of Friday's regular session, the price of Bitcoin (CRYPTO: BTC) was up 9.7% on the week, while Ethereum (CRYPTO: ETH) had gained 5.1%. So-called memecoins Dogecoin (CRYPTO: DOGE) and Shiba Inu (CRYPTO: SHIB) also soared 41.2% and 16.5%, respectively, this week.

Company card for Bitcoin CRYPTO:BTC

On Bitcoin ETF inflows, new spot ETH ETF filings

The price of Bitcoin eclipsed $71,000 several times this week -- a week after falling below $63,000 -- before settling to trade around $69,500 as of this writing. The world's most prominent cryptocurrency was bolstered in part by huge net inflows into bitcoin ETFs exceeding $243.4 million on Thursday.

On Wednesday, the ARK 21 Shares Bitcoin ETF (NYSEMKT: ARKB) singlehandedly registered net inflows of $200.7 million, becoming the third bitcoin ETF to cross the $200 million mark since the the United States Securities and Exchange Commission (SEC) approved the first 13 bitcoin ETFs back in January.

Bitcoin, for its part, has enjoyed an incredible rally dating back to October 2023, which came after months of speculation after the SEC declined to appeal a federal court's ruling in August preventing crypto-asset manager Grayscale Investments from converting its popular Grayscale Bitcoin Trust into an ETF.

For perspective, ETFs can be bought and sold throughout the normal trading day through nearly any online brokerage -- as opposed to requiring investors to set up separate crypto trading accounts with a crypto-specific firm. So ETFs are a much more accessible medium for anyone who wants to put their money to work in cryptocurrencies. The SEC's approvals have stood out vote of confidence from a government agency in cryptocurrencies as a legitimate investment option.

Some investors have also speculated more recently that Etherium ETF approvals could be on the way in the coming months, further bolstering crypto investment options for retail traders. On Wednesday, Fidelity Investments filed a Form S-1 Registration statement for its own spot ETH ETF. Asset Management firm Bitwise followed suit with its own registration statement filing for a similar spot Ether ETF on Thursday.

On the bitcoin halving event

Meanwhile, crypto investors are eagerly awaiting a so-called bitcoin halving event scheduled for mid-April -- the fourth such event in bitcoin's history, with previous halvings in 2012, 2016, and 2020 -- where bitcoin miners' reward for solving complex transactions is effectively cut in half to limit the rate at which new bitcoin are introduced into the system until the maximum of 21 million bitcoins have been issued. Bitcoin's price has previously skyrocketed following each of the first three bitcoin halving events, so investors have naturally speculated a similar rally could occur next month.

The halving event is similar in some ways to a stock split, where a company may reduce its per-share price but commensurately increase the number of shares issued. Splits are a zero-sum event, of course, considering the value of the underlying business remains the same. But many retail investors tend to believe the lower post-split stock price is more attractive. Multiple cryptocurrency market pundits have argued that this halving event should further spur adoption of bitcoin while also limiting supply -- effectively keeping the price of bitcoin high.

"The halving reminds people that the supply of bitcoin is truly limited and that demand is increasing, driving up the price of bitcoin in the long term," Azteco Chief Marketing Officer David Bailey wrote this week. "As something becomes more valuable, more people will want to use it, and so the cycle continues."

There are no guarantees, of course, that the price of bitcoin will rally on the heels of this halving in the near term. But it's hardly surprising to see crypto traders embracing the positivity leading up to the event.

read more : Sam Bankman-Fried sentenced to 25 years − how he went from $30B crypto CEO to prison inmate