Bitcoin regains its $1 trillion dominance with ease

For the first time since its record heyday in late 2021, the largest cryptocurrency in the world has increased in value by 22% this year to $52,005, surpassing the $1 trillion market cap.

Its comeback has energized the larger cryptocurrency market, which now stands at over $2 trillion according to CoinGecko data and includes ether and other digital coins.

The industry has benefited from U.S. regulatory approval of a number of spot bitcoin exchange-traded funds (ETFs), including those from Fidelity and BlackRock, that provide access to the cryptocurrency through traditional stock markets.

According to brokerage Bernstein, the U.S. spot ETFs gained 60,000 bitcoins in the first month of their inception, which is more than twice the amount of bitcoin mined in the same period. According to Mark Connors, head of research at 3iQ Corp. in Canada, the volume of flows is much greater than anyone could have predicted. Volumes of crypto trading are likewise strong.

According to a survey by London-based researcher CCData, spot trading volumes on centralized exchanges increased 4.4% to $1.4 trillion in January, marking the highest level since June 2022 and the fourth consecutive month of gain. The biggest public cryptocurrency exchange, Coinbase Global, reported its first quarterly profit in two years last week because of the renewed interest.

Not all cryptocurrency hijinks are positive; there are indications that investors driven by FOMO are manipulating the market.

The crypto dread & greed index from CoinGlass, which runs from zero to 100 — where zero means "extreme fear" and 100 means "extreme greed"  was at 72. Typically, excessive greed on the part of investors indicates that a market correction is overdue.

Persistently high interest rates could pose a danger to riskier assets like bitcoin; traders have retracted predictions of a rate cut to June from March after a run of positive U.S. economic data.