Bitcoin is once again in the spotlight as it recently soared past $41,000, marking a remarkable 150% rise in the first half of the year. The world’s largest cryptocurrency, known for its volatility, experienced a rollercoaster ride, going from just over $5,000 at the start of the pandemic to nearly $68,000 in November 2021. However, a series of Federal Reserve rate hikes and the collapse of FTX led to a significant downturn.
At the beginning of 2023, a single bitcoin’s value plummeted to less than $17,000, losing over 75% of its value. Nevertheless, investors started returning as inflation cooled, and the collapse of tech-focused banks prompted a shift towards cryptocurrencies.
The current rally is fueled by the anticipation of the possible approval of spot bitcoin exchange-traded funds (ETFs). This new investment avenue, allowing investors to buy and sell at spot prices rather than futures, is seen as a potential game-changer. Advocates believe it could simplify entry into the crypto market and mitigate some of the well-known risks associated with cryptocurrency investments.
Kaiko research analyst Riyad Carey highlighted the optimism surrounding the potential approval of spot bitcoin ETFs as a long-term catalyst. However, he cautioned that regulatory approval doesn’t guarantee sustained gains, and future volumes could either boost or undermine Bitcoin’s value.
The recent disruptive period for cryptocurrencies includes the U.S. government imposing a $4 billion fine on Binance, the world’s largest crypto exchange. Despite the hefty fine and founder Changpeng Zhao’s guilty plea, Binance continues to operate, and Carey suggests that the settlement may have propelled the market forward by removing a significant overhang.
Experts emphasize that investing in cryptocurrencies remains a risky bet with unpredictable fluctuations. The collapse of FTX last year has left a lasting impact on public confidence, and institutional money, particularly from hedge funds, is now driving much of crypto investing.
While Bitcoin’s current price stands at $41,709, other cryptocurrencies have experienced varying trends. Ethereum, for example, has risen 85% since the start of 2023, reaching $2,223. On the other hand, Binance Coin and Dash have seen declines of about 5.25% and 24.37% for the year, with prices around $231 and $32, respectively. Investors are advised to stay vigilant, considering the lingering effects of market turbulence and the potential for rapid reversals.
