(Bloomberg) -- Bitcoin hit a fresh all-time high for the fourth time in six days, bolstered by record-breaking inflows into US exchange-traded funds tied to the cryptocurrency.
The world's largest cryptocurrency reached a high of $73,664 on Wednesday, before paring its rise slightly to trade at around $73,080 as of 8:29 a.m. in New York. Meanwhile, net daily inflows into US spot Bitcoin ETFs on Tuesday topped $1 billion for the first time, data compiled by Bloomberg show, with BlackRock's IBIT setting its own record at $849 million in daily flows.
Read More: VanEck's Bitcoin ETF Sees $200 Million Inflow After Waiving Fees
“The reasons behind the rally are pretty clear. A rampant demand for the physically-backed ETFs amid a low market depth backdrop,” said Manuel Villegas, digital assets analyst at Swiss private bank Julius Baer. As issuers buy up large piles of Bitcoin to support their ETFs, the token's overall circulating supply has begun to dwindle.
Bitcoin's weekly issuance of roughly 6,300 tokens is “utterly dwarfed” when contrasted against the ETFs' token demand from past weeks, Villegas said, the latter of which is about 40,000 tokens.
Other cryptocurrencies have been similarly lifted by renewed interest in the asset class. Ether traded as much as 3.3% higher to $4,083 on Wednesday. It has increased about 75% this year.
Using Ethereum, the world's most commercially successful blockchain ecosystem, is about to get much cheaper after the latest software upgrade of the network on Wednesday.
Referred by developers as Dencun, the update is expected to dramatically lower expenses for so-called Layer 2 networks — dozens of chains like Arbitrum, Polygon and Coinbase Global Inc.'s Base that link to Ethereum. A transaction that might have previously cost $1 to post may now cost one cent; another that used to cost cents would now be a fraction of a cent.
--With assistance from Sidhartha Shukla and Olga Kharif.
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