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Bitcoin appears to be approaching a new all-time high after its price rose nearly 10 percent in the past 24 hours.
The latest rally builds on a year of upward momentum for the cryptocurrency, which has seen its price rise from less than $20,000 at the start of last year to more than $62,000 on Wednesday — $7,000 shy of the record it reached in November 2021.
Several factors have led to Bitcoin's recent resurgence, with some market analysts claiming that Bitcoin's gains are far from over.
“We have entered a new era for Bitcoin, and its meteoric rise this week represents the clear start of a new bull market,” said Alex Adelman, founder of cryptocurrency app Lolli. The Independent. “This Bitcoin bull market will be different than ever before.”
Adelman points to exchange-traded funds (ETFs) recently approved by the US Securities and Exchange Commission, which brought billions of dollars worth of institutional investment into the cryptocurrency market for the first time.
This week, nine newly approved ETFs broke the all-time daily trading volume record, suggesting that it is mostly this new wave of investors that is boosting the market.
“In contrast to previous bull markets, there is little speculative enthusiasm on the part of retail investors,” Adelman said. “Instead, the momentum is based on a more mature and calculated approach to Bitcoin with an understanding of its strength from the world's largest institutional players…Once Bitcoin breaks its all-time high, we will see an additional wave of interest in Bitcoin from smaller investors.”
Bitcoin ETFs offer new protections for cryptocurrency investors, which could provide more stability to the market, according to Nigel Green, CEO of financial advisory firm deVere Group. This in turn can help the market mature, mitigate price volatility issues and attract more investors to this area.
The limited supply of bitcoin — only 21 million will ever exist — has earned the cryptocurrency the name “digital gold” in recent years, and encouraged a no-sell mentality among some investors. At the same time, its usefulness and accessibility have increased dramatically in recent years.
Alongside established banks offering customers ways to buy, sell and spend Bitcoin, governments have also recognized its potential as an alternative to traditional fiat currencies. In 2021, El Salvador became the first country in the world to introduce it as a national currency.
“The broader acceptance of cryptocurrencies, with major companies now accepting bitcoin as a form of payment and traditional financial platforms integrating digital assets, is attracting a more diverse group of retail investors,” Green said. The Independent.
“Easy-to-use exchanges and mobile apps have made it easier than ever for retail investors to enter the cryptocurrency market, contributing to the democratization of investing in cryptocurrencies. This combination of institutional and retail interest creates a dynamic and robust ecosystem that can drive Bitcoin to new heights.
Another factor driving positive market sentiment is the possibility that the limited supply of Bitcoin will shrink further due to an event known as the halving. This will see cryptocurrency mining rewards halved, with previous events leading to record highs in the following months.
The next halving occurs approximately every four years, and is scheduled for April 19. Bitcoin's historical price cycles can be attributed to this quadrennial event, where some analysts prepare price prediction models based on Bitcoin halvings.
The sudden price gains have also led to warnings about the risks involved in investing in Bitcoin, which is still a relatively new asset class.
“As we look to the year ahead, it is important to remember first principles when trading cryptocurrencies,” said Bivu Das, managing director of UK cryptocurrency exchange Kraken.
“I always encourage people to do their own research into the crypto platforms and assets out there. Especially for anyone new to the space, look for a platform that provides an experience centered around simplicity, customer service, strong security, and solid liquidity.
