Hi Readers! This news blog covers the recent increase in the value of bitcoins. On Feb 27, 2024, in the Asia trade news, the cryptocurrency bitcoin reached a two-year high above $57,000 due to solid institutional purchasing. At the same time, smaller competitor “ether” crossed $3,200 for the first time in two years.
The Monday Finance report discloses that the software company MicroStrategy, a cryptocurrency investor, had just spent $155 million on purchasing about 3,000 bitcoins. This increases the price of the most popular crypto coins, none other than bitcoin, to a 10% rise in only two sessions.
Legalizing bitcoin-owning exchange-traded funds (ETFs) in the US has also helped the most prominent cryptocurrency, i.e., Bitcoin, by market value. Contrary to apprehensive larger markets, trading volumes in some of the funds jumped on Monday, and companies tied to cryptocurrencies also saw a rise in value.
Why Bitcoin’s Value is Raising High Everyday?
Cryptocurrency Bitcoin has been making headlines for its rapid increase in value. Many people wonder why this cryptocurrency’s value seems to be skyrocketing daily. In this blog, let’s find the factors contributing to its popularity in the digital world.
The Fundamentals of Cryptocurrency Bitcoin:
Bitcoin is a decentralized digital currency. It operates without the need for a central bank or government authority. It uses a technology called blockchain to ensure secure and transparent transactions. With a limited supply of 21 million coins, Cryptocurrency Bitcoin’s scarcity has significantly driven up its value.
Demand and Adoption:
One of the primary reasons for Cryptocurrency bitcoin’s Increasing value is the growing demand for and adoption of this cryptocurrency. As more people and institutions embrace Bitcoin as a store of value and a means of payment, its value continues to rise. The limited supply of Bitcoin and increasing demand have created a perfect storm for value appreciation.
Institutional Interest of Cryptocurrency Bitcoin
In recent years, institutional investors have shown a keen interest in Bitcoin as an alternative investment asset. Companies like MicroStrategy and Tesla have invested billions of dollars in Bitcoin, further legitimizing its status as a valuable asset class. This influx of institutional money has fueled the rise in the value of cryptocurrency bitcoin and has put it on the radar of mainstream investors.
Market Speculation:
The volatile nature of Bitcoin has made it an attractive asset for traders and speculators looking to profit from price fluctuations. The speculative nature of the market has led to increased trading volume and volatility, contributing to the rapid increase in Bitcoins. While speculation can drive up prices in the short term, it also introduces a level of risk that investors need to consider.
Global Economic Uncertainty:
With the economic uncertainty brought about by the COVID-19 pandemic and inflation concerns, many people are turning to Bitcoin. It acts as a hedge against traditional financial assets. The decentralized nature of Cryptocurrency bitcoin and its limited supply makes it an attractive option for those looking to protect their wealth from potential devaluation. As a result, BiBitcoin’salue has continued to rise as more people seek out alternative investment options.
What are the Transitions Bitcoin faces in the crypto market in the financial year 2023-24?
Market Cycles and Trends:
Cryptocurrency Bitcoin’s price follows consistent cycles, including peak-to-trough bottoms, recoveries, and subsequent rallies to new cycle highs.
The typical structure of a crypto market cycle involving Bitcoin (BTC) includes:
- BTC peaks at a new all-time high.
- BTC experiences an 80% or so drawdown.
- The price bottoms almost one year after the prior cycle’s high.
- BTC starts recovering and takes about two years to reach a new all-time high.
- BTC continues rallying for another year before topping its next cycle high.
- The cycle repeats.
- These cycles are driven by macro trends, particularly liquidity cycles, rather than halvings alone.
Bitcoin is not merely an inflation hedge but also a hedge against currency debasement, driven by monetary inflation and central bank balance sheet expansion.
Halving and Liquidity:
Cryptocurrency Bitcoin halvings (reducing block rewards) are not the primary catalyst for bull markets; liquidity cycle uptrends play a more significant role.
- Each halving has coincided with an expansionary liquidity environment.
- The next halving is expected in April 2024, aligning with historical patterns.
- A spot BTC ETF approval ahead of time could further boost bullish uptrends due to increased fund flows during liquidity upcycles.
Price Predictions:
- Bitcoin’s price bottomed around November 2022, approximately one year after its last cycle peak.
- If BTC follows its historical playbook, we might see a new all-time high by the fourth quarter of 2024 and its next cycle peak roughly a year later.
- Some traders expect BTC prices to regain their lifetime peak of over $69,000 by mid-2024 during an “acceleration phase” marked by volatility and a sharp rally.
Challenges Ahead:
Bitcoin faces challenges related to macroeconomics:
- Compared to T-bills or cash, it can’t compete with yield in a rising rate environment.
- It needs a clear use case beyond speculative trading.
- People are more interested in holding it for price appreciation than building on it.
- Stablecoins’ market cap has decreased, potentially limiting any near-term rally.
Final Takeaway
In conclusion, the reasons behind cryptocurrency Bitcoin’s increasing value are multifaceted and complex. Factors such as growing demand, institutional interest, market speculation, and economic uncertainty all play a role in driving up the value of the bull run of this digital currency. While Bitcoin’s value may continue to fluctuate in the short term, its long-term potential as a disruptive force in the financial industry remains undeniable.
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