Bitcoin, the leading cryptocurrency, has achieved a new all-time high, surpassing its previous peak set in November 2021. On Tuesday, its value exceeded $69,000, though it later settled at slightly over $64,000. Currently valued at around $1.3 trillion, Bitcoin constitutes a significant portion of the total $2.6 trillion cryptocurrency market. This surge can be attributed to several factors.
Bitcoin, introduced in 2008 by Satoshi Nakamoto, is a digital currency designed to facilitate direct online transactions without intermediary financial institutions. Its appeal lies in its decentralised nature, allowing financial transactions without oversight and fees. Additionally, Bitcoin has been perceived as an “inflation hedge” due to its finite supply of 21 million units.
The recent rise in Bitcoin’s value can be attributed to the approval of exchange-traded funds (ETFs) by the US financial regulator in January. ETFs, which track Bitcoin’s price, signify increased institutional maturity in the cryptocurrency market. However, skepticism remains, as the head of the Securities and Exchange Commission (SEC), Gary Gensler, views Bitcoin primarily as a speculative and volatile asset used for illicit activities.
Factors contributing to the recent surge include elevated inflation readings in the US, prompting investors to turn to Bitcoin as an insurance policy. The overall boom in tech stocks has also increased risk appetite, with Bitcoin benefiting from the market enthusiasm.
While the current rise in Bitcoin’s value may not be sustainable in the long term, analysts anticipate possible consolidation or correction. The upcoming “halving” event, where the supply of new bitcoins is halved, could impact prices positively. However, regulatory developments, such as increased oversight in the UK and EU and the recent US ETF approval, may influence Bitcoin’s future trajectory.
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