Bitcoin is back over $60,000 for the first two years. This comes amid renewed enthusiasm for the most popular cryptocurrency in the world.
The jump was a second sharp turn in the digital coin’s value, which had fallen below $16,000 by November 2022 due to a series of scandals and aggressive rate increases.
The latest rally gained momentum ahead of a “halving”, an event scheduled for April. This is a periodic procedure designed to limit bitcoin’s overall supply, thus raising demand near-term. The “halving” of 2020 preceded the dramatic rise in bitcoin to an all-time peak of $69,000 by 2021.
Charles-Henry Monchau said that historically, halvings of mining rewards have led to massive bull runs.
Over the last six months, the market expectations of interest rate reductions by the US Federal Reserve in this year have become more concrete. This has increased investors’ appetite for higher-risk assets. It is expected that the US Federal Reserve will lower its base interest rate by three times from its 23-year high, 5.25 percent. Other central banks are also expected to follow.
Bitcoin’s peak value was reached when interest rates were historically low in developed economies after the pandemic. The ultra-low interest rate also encouraged market participants to invest in assets that could yield higher returns, and trading apps made financial markets more accessible for day traders.
In response to a recent court ruling, the US Securities and Exchange Commission (the financial watchdog of America) lifted an embargo that had been in place for many years on exchange-traded bitcoin funds. These are a newer and more accessible form of investment vehicle.
Since the first bitcoin ETFs in America were introduced in January, the value of cryptocurrency has been steadily increasing.
Nigel Green is the chief executive officer of deVere Group. A financial advice firm. He said that the increasing interest and involvement from institutional investors was a key factor behind the recent bitcoin surge. This has been mainly due to the introduction of Bitcoin ETFs. If the current momentum persists, we anticipate that bitcoin will surpass the previous high within a few weeks.”