Bitcoin has surged to new all-time highs above $72,000, driven by record-breaking weekly inflows into cryptocurrency funds. According to CoinShares analyst James Butterfill, crypto investment products saw $2.7 billion in inflows as of March 8, with year-to-date inflows totaling $10.3 billion, nearly matching the total for all of 2021. Bitcoin accounted for the majority of these inflows, receiving $2.6 billion year-to-date and representing 14% of total crypto assets under management worldwide.
The surge in inflows can be attributed in part to growing investment in recently-approved spot Bitcoin ETFs in the United States, which have traded over $110 billion since their inception on Jan. 11. Five U.S. spot Bitcoin ETFs now hold over $2 billion in assets, with Bitwise’s BITB fund being the latest addition to this group. Analysts are optimistic about Bitcoin's future price, with IG market analyst Tony Sycamore predicting a push toward $80,000 in the coming months, supported by regulatory acceptance and institutionalization of cryptocurrencies.
The recent rally also coincided with the London Stock Exchange accepting Bitcoin and Ether exchange-traded notes, as well as increased acceptance from the UK Financial Conduct Authority toward new crypto-related financial products. Mikkel Morch, founder of digital asset investment fund ARK36, sees these regulatory shifts, along with the upcoming halving event and continued growth of Bitcoin ETF inflows, as heralding a new era of growth and mainstream adoption for cryptocurrencies.
Israel has announced plans to introduce an interest-bearing shekel Central Bank Digital Currency (CBDC), with the framework for its implementation outlined by the Bank of Israel. The CBDC will operate on a two-tier model, offering features such as instant 24/7 payments, multipayment support, offline usability, and an option for the currency to bear interest. The system architecture will prioritize user privacy, ensuring that the central bank does not have access to personally identifiable information about end users' balances and transactions.
Commercial banks in Israel currently offer 4.86% interest on fiat shekel deposits and savings. Under the central bank's CBDC plans, banks could include the shekel CBDC in their short-term liquidity buffer, although this portion would not bear interest. The design of the data structure must enable compliance with all defined assumptions, including the ability to enforce holding restrictions and apply interest based on user type and balance size, highlighting the advantage of having a centralized database.
Israel has been considering a digital shekel since 2021, but no pilot tests have been initiated yet. The Bank of Israel stated that decisions regarding the digital shekel system are not final due to the interdependence of its various components. The central bank had previously suggested that a shekel CBDC could be issued if stablecoin use increases, but as of now, there are no indications of substantial stablecoin adoption for payments in Israel.
El Salvador's investment in Bitcoin has proven lucrative, with the country's Bitcoin treasury now valued at over $200 million, representing an $85 million profit. President Nayib Bukele's strategy, which involved purchasing Bitcoin as legal tender for the country starting in September 2021, has yielded a 70% return on the dollar-cost average purchase price. This success follows a recent rally that saw Bitcoin prices reach a new all-time high above $72,000 on March 11.
Despite initial concerns raised when Bitcoin's price fell from its peak in November 2021 and plummeted to as low as $16,000 during the subsequent bear market, El Salvador's Bitcoin portfolio broke even in February when BTC prices exceeded the dollar-cost average of $42,600. The portfolio, which contains 2,861 BTC, is now worth $207.3 million. President Bukele highlighted additional sources of Bitcoin revenue, including proceeds from the country's passport program, converting BTC to USD for local businesses, BTC mining, and government services.
El Salvador has implemented several initiatives to support its Bitcoin adoption. In December, a migration law was approved, granting expedited citizenship to foreigners who donate Bitcoin to government programs. The country also launched its first Bitcoin mining pool in October, aiming for financial independence. Venture capitalist Tim Draper believes that if Bitcoin reaches $100,000, El Salvador may be able to pay off loans owed to the International Monetary Fund (IMF), further strengthening its financial position. President Bukele, who was recently re-elected, has criticized media coverage of El Salvador's Bitcoin strategy, accusing them of exaggerating losses when Bitcoin's market price was low.
