Bitcoin reaches over $41,000 for the first time since April 2022. What factors are driving the price increase?
Bitcoin Surges Past $41,000 Mark, On Track For A Strong Year
Bitcoin, the world’s largest cryptocurrency, is once again making waves in the market. On Monday, it soared past the $41,000 mark for the first time in over a year and a half, marking a 150% rise so far this year.
Volatile Journey
The journey of Bitcoin has been volatile, to say the least. At the start of the pandemic, it stood just over $5,000 and then skyrocketed to nearly $68,000 in November 2021, driven by a surge in demand for technology products. However, prices fell back to earth during a series of aggressive Federal Reserve rate hikes aimed at taming inflation, and due to the collapse of FTX, one of the biggest companies in crypto.
Return of Investors
At the beginning of 2023, a single bitcoin’s value plummeted to less than $17,000, a loss of over 75% of its value. However, investors began returning as inflation started to cool, and the collapse of prominent tech-focused banks led more investors to turn to crypto as they bailed out of positions in Silicon Valley start-ups and other risky bets.
Fueling the Rally
Prospects for the possible approval of spot bitcoin exchange traded funds (ETFs) are fueling this latest rally. Industry advocates say this new way of investing in bitcoin at spot prices, instead of futures, could make it easier for anyone to enter the crypto world while lowering some of the well-documented risks associated with investing in cryptocurrencies. The possible approval of spot bitcoin ETFs could create a much larger pool of crypto investors.
Disruptive Period
This current rally arrives during an incredibly disruptive period for cryptocurrencies. Binance, the world’s largest crypto exchange, was slapped with a $4 billion fine last month by the U.S. government as its founder pleaded guilty to a felony charge. Despite this, Binance continues to maintain its market share and operate.
Risk and Uncertainty
Despite the recent excitement around bitcoin, experts caution that crypto remains a risky bet, with wildly unpredictable fluctuations in value. The collapse of FTX last year left a big scar on the public’s confidence in the crypto industry and crushed retail investors. Additionally, liquidity in cryptocurrency markets has yet to return to pre-collapse levels, and lower liquidity can exacerbate price fluctuations.
The Price of Bitcoin
As of around 1:30 p.m. Eastern time Monday, the price of bitcoin stood at $41,709, but experts warn that people should always be aware that it can quickly reverse.
Overall, while Bitcoin’s current rally is impressive, it is important to remain cautious and aware of the risks involved in investing in cryptocurrencies.
I have over 10 years of experience in the cryptocurrency industry and I have been on the list of the top authors on LinkedIn for the past 5 years. I have a wealth of knowledge to share with my readers, and my goal is to help them navigate the ever-changing world of cryptocurrencies.
