On Wednesday, Bitcoin gained back its $1 trillion market capitalization, increasing by 3% to reach $51,200. According to CoinMarketCap, the price of Bitcoin has increased by 19.5% within the past seven days. This level of trading was last observed in November 2021. After more than two years, the largest cryptocurrency token by market capitalization crossed the $50,000 threshold earlier this month, making a recovery from the scandals and wipeouts that tarnished the industry. Since January 2023, the token's value has increased by over three times. It is still far behind its top of $69,000, which was reached in November 2021.
Why is the price of bitcoin rising?
Experts believe that the approval and subsequent listing of Bitcoin spot exchange-traded funds (ETFs) in the US on January 11 is the primary cause of the spike.
On the same day that nine of these ETFs made their debut, the more than ten-year-old Grayscale Bitcoin Trust also became an ETF. The token's investor base is expected to grow as a result of ETF accessibility. As to Bloomberg, approximately $9 billion has been invested in the new funds thus far.
According to Bitget Research principal analyst Ryan Lee, "Bitcoin trade volumes increased by 300 percent, from $16 billion to $50 billion, between January 1 and January 10. The authorised Bitcoin ETF has this effect."
The expectation that Bitcoin will be halved is another factor contributing to the increase. It's slated to happen in April of this year. The amount of Bitcoin that miners receive in exchange for running the potent computers that validate transactions on the blockchain is reduced by the Bitcoin halving. It is sometimes seen as backing up prices that are determined by historical precedent.
Lee claims that the initial halving took place in November of 2012. The price of Bitcoin increased from $13 to $1,152 in less than a year, peaking one year and a month after the halving.
After the second halving, which took place in July 2016, the price of Bitcoin increased from $664 to $17,760, peaking a year and a half later.
The price of Bitcoin increased following the third halving in May 2020, peaking one year and six months later at $67,549 (April-November 2021). The price of Bitcoin had previously reached a high of $9,734 at that time.
The next 63 days will see the fourth halving now.
The chief executive officer of BuyUcoin, Shivam Thakral, stated that a halving might drive the market back to its prior all-time high because rate cuts by the US Fed are expected in the same months.
In the medium to long run, the market will be driven by macro variables like the US Fed's projected rate cut and the rising popularity of Bitcoin ETFs. After the halving, we may anticipate that Bitcoin will retest its all-time high of $69,000," he stated.
Manhar Garegrat, country leader of Liminal Custody Solutions' India and Global Partnerships, continued, "If this increased demand continues, the Bitcoin halving could mark the beginning of a new bull run for digital assets, pushing Bitcoin beyond any historic all-time highs."
