Bitcoin has surpassed $60,000 for the first time in more than two years and is expected to sustain its upward trajectory with an upcoming halving of reward for mining Bitcoin in April.
The surge last time was driven by the liquidity in the world economy after governments eased monetary policy in the wake of Covid-19. However, this time around, the crypto market has rallied due to factors like the expected rate cut by the US Federal Reserve, the increasing popularity of Bitcoin exchange-traded funds (ETFs), and the anticipation of Bitcoin halving in April.
The resurgence “signifies a pivotal moment in the crypto landscape,” says Raj Karkara, Chief Operating Officer (COO) of ZebPay, a crypto exchange. “It not only demonstrates the resilience of digital assets, but also underscores the growing mainstream acceptance of Bitcoin,” he says. “The approval of ETFs has played a significant role in expanding the investor base, contributing to the positive sentiment,” he adds.
February 28 marked a significant moment for the popular crypto asset Bitcoin as it surged past $60,000, achieving the milestone for the first time in more than two years. In November 2021, the price of Bitcoin skyrocketed to nearly $69,000 (intra-day) but later plunged by half due to regulatory concerns and high interest rates, diminishing its appeal as an asset class.
Bitcoin ETFs were listed on highly regulated US stock exchanges starting in January 2024. The listing has been well-received as the ETFs are subject to close supervision, adding an extra layer of protection for investors. Moreover, Bitcoin ETFs offer the benefit of investing in a robust and regulated market. This is important considering scandals in the past where many individuals lost their assets due to compromised wallets or sudden closure of companies.
The Bitcoin halving is another event that is generating a lot of excitement. It takes place every four years when the reward for Bitcoin mining is reduced by half. The purpose is to limit supply, so when the reward decreases, it positively impacts prices. There will only be 21 million Bitcoins, and nearly 19 million have already been mined.
“The fourth halving will occur in April 2024. It is expected that the price of Bitcoin will rise and peak one year and five months after the halving. A similar trend has been observed with the previous three halvings, with prices increasing over time to hit a new all-time high,” says Lee
However, the US Securities and Exchange Commission’s (SEC) approval of the first Bitcoin ETF in the US has boosted crypto worldwide and increased demand for the oldest virtual currency. Bitcoin has risen more than 16% so far this year. The crypto market has started heating up in the past few months, thanks to improving macroeconomic conditions and in anticipation of rate cuts by the US Fed. Crypto trading platform CoinSwitch saw a 200% sequential growth in trading volumes in Q32023. Coinbase Global Inc., the largest US crypto exchange, saw net consumer transaction revenue in Q42023 rise 60% over a year ago, according to a letter to shareholders.
Why bitcoin is up by almost 150% this year.
The crypto industry, often seen as an unwelcome pest by many financiers and regulators, has displayed a remarkable level of resilience in the face of challenges. Despite being plagued by issues such as money laundering, terrorism financing, and fraud, the industry has not only survived but thrived, with bitcoin alone witnessing a staggering 150% increase in value throughout the year. In this article, we delve into the reasons behind this unexpected surge.
Highlights
- Indestructibility Built into Technology: The Blockchain Advantage
- Beyond the Bubble: Bitcoin’s Maturing Market Position
- The ETF Effect: Institutional Interest and Mainstream Adoption
- Institutional Interest: BlackRock and Fidelity Lead the Way
- Diversification in the Digital Age: The Role of Cryptocurrencies
- Innovative Applications: Blockchain Beyond Cryptocurrencies
The crypto industry, often seen as an unwelcome pest by many financiers and regulators, has displayed a remarkable level of resilience in the face of challenges. Despite being plagued by issues such as money laundering, terrorism financing, and fraud, the industry has not only survived but thrived, with bitcoin alone witnessing a staggering 150% increase in value throughout the year. In this article, we delve into the reasons behind this unexpected surge.
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Indestructibility Built into Technology: The Blockchain Advantage
One of the key factors contributing to the crypto industry’s resilience is the indestructibility built into its technology. Unlike traditional companies, cryptocurrencies like bitcoin and ether operate on blockchain technology, creating a decentralized network of computers that maintain a secure database of transactions. This decentralized nature makes it nearly impossible to shut down the entire system, as it does not rely on a single entity. The only scenario in which the system could collapse is if the value of the tokens falls to zero.