Bitcoin (BTC-USD) surged on Wednesday to break above $60,000, putting it within striking distance of its all-time high as enthusiasm for the world’s largest cryptocurrency reached a frenzy last seen during a 2021 boom.
The digital asset climbed as high as $63,900, touching its highest intraday point since November 2021, before dropping back to the $60,000 level amid reports that some users of the cryptocurrency exchange Coinbase (COIN) began showing a $0 balance in their accounts.
Coinbase first said on its website that "we are aware that some users may see a zero balance across their Coinbase accounts and may experience errors in buying or selling" but that "your assets are safe."
A second update said "we’re beginning to see improvement in customer trading. Due to increased traffic, some customers may still see errors in login, sends, receives and with some payment methods." A third update offered the assurance that "we are starting to see Coinbase.com activity normalizing."
Its CEO Brian Armstrong also tried to calm customers Wednesday. In a post on X, formerly known as Twitter, he first said that "we are dealing with a LARGE surge of traffic — apologies for any issues you encounter. The team is working to remediate."
Later in the day he said "apps are now recovering" and wrote that the surge in traffic had exceeded what the company had "load tested."
Apps are now recovering.
We had modeled a ~10x surge in traffic and load tested it. This exceeded that number.
It's expensive to keep services over-provisioned, but we'll need to keep working on auto-scaling solutions, and killing any remaining bottlenecks. Thank you for… https://t.co/JXVppV57AF— Brian Armstrong ??? (@brian_armstrong) February 28, 2024
Before prices pulled back amid the Coinbase snafu, the rally had been pushing closer to bitcoin's all-time mark of $68,789. That apex came in November 2021, six months before a spectacular crash in 2022.
"Ultimately, what we're seeing is crypto is kind of rising from the ashes of the 2022 market," said Ryan Rasmussen, a senior crypto research analyst for Bitwise Asset Management.
Bitcoin is riding a wave of excitement sparked by a series of spot bitcoin exchange-traded funds that started trading in January. Those funds gave everyday investors widespread exposure to the digital asset, triggering predictions of a new bull run.
"Our assumption is that the price of bitcoin is going to achieve $125,000 by the end of 2025," Benchmark's Mark Palmer added on Yahoo Finance Live.
Investors are bidding other cryptocurrencies and related stocks higher too. Year to date, the second-largest cryptocurrency, ether (ETH), has outperformed bitcoin by more than 4% while the total market value for all crypto assets is up roughly 34% to $2.22 trillion, according to CoinMarketCap.
One sign of surging enthusiasm for bitcoin is the trading activity in the bitcoin ETFs that launched in January. They have logged more than $6.7 billion in net flows as of Wednesday, according to data collected by London-based fund Farside Investors.
So far this quarter, bitcoin trading volume has surpassed levels seen for the same period in every quarter of 2023.
That activity has been a boon to major crypto trading venues, including Coinbase and Robinhood (HOOD).
But the surge in trading also became a liability for Coinbase Wednesday as some of its users began reporting that their account balances showed $0.
Coinbase's stock dropped in intraday trading as it provided updates about its efforts to resolve the issue and it closed roughly flat for the day.
We are aware that some users may see a zero balance across their Coinbase accounts & may experience errors in buying or selling. Our team is investigating this & will provide an update shortly. Your assets are safe.
You can track this incident at https://t.co/a3pl4WiDhZ— Coinbase Support (@CoinbaseSupport) February 28, 2024
Other bitcoin-related stocks are also riding higher. Bitcoin miner Marathon Digital (MARA) and bitcoin holder MicroStrategy (MSTR) have risen 35% and 40%, respectively, since the beginning of the year. MicroStrategy announced Monday morning that it acquired an additional 3,000 BTC, bringing its total investment to 193,000 BTC, which was valued at over $11.8 billion as of Wednesday.
Derivatives traders are also now piling into the bitcoin rally, according to Cumberland Labs analyst Christopher Newhouse.
There are roughly $25 billion of open contracts in the bitcoin futures market, according to crypto derivatives data provider Coinglass. That’s a new high for outstanding bitcoin futures bets, surpassing a mark last set in April 2021.
"In the options market, the narrative is clear," Newhouse added. "People are bullish."
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
Click here for the latest crypto news, updates, and more related to ethereum and bitcoin prices, crypto ETFs, and market implications for cryptocurrencies
Read the latest financial and business news from Yahoo Finance