Bitcoin continued its winning streak soaring past the $64,000 mark, reaching its highest point since November 2021. This surge represents a remarkable gain of over 20 per cent within the week, contributing to a staggering year-to-date increase of more than 50 per cent. According to IntoTheBlock, more than 95 per cent of Bitcoin’s circulating supply is in profit. At the present moment, Bitcoin is actively trading at the $61,000 level, with a keen eye on the $65,000 milestone. If the current momentum persists, Bitcoin will likely surpass its previous all-time high of $69,000 level soon.
Factors Fueling The Bitcoin Drive
Inflows Into Spot Bitcoin ETFs
One significant factor is the substantial influx into Bitcoin exchange-traded funds (ETFs). The surge in Bitcoin’s value has largely been attributed to substantial investments pouring into 10 spot Bitcoin ETFs. This Wednesday, a new daily record was established, with trading volumes exceeding $7.7 billion. In a parallel development, BlackRock’s Bitcoin ETF witnessed a substantial increase, with a trading volume of $3.3 billion on Wednesday—twice the volume of its previous record.
Approaching Bitcoin Halving Event
Another critical element fueling Bitcoin’s surge is the imminent Bitcoin halving scheduled for April. Bitcoin Halving is one of the most anticipated events on the Bitcoin calendar, occurring every four years. It reduces the reward given to crypto miners by half. The next halving will reduce the mining reward to 3.125 BTC per block. Historically, Bitcoin halving events have been associated with surges in Bitcoin prices, and the impending halving is also likely contributing to the current bullish trend.
Institutional Investments Into Bitcoin
Adding to the positive sentiment is MicroStrategy’s strategic move to acquire an additional 3,000 bitcoins for $155 million elevating its total to 193,000 bitcoins valued at $9.88 billion. Furthermore, Reddit has joined the list of companies that directly purchased digital assets alongside MicroStrategy and Tesla.
What Should Investors Do?
Research: Conduct thorough research on Bitcoin and the overall cryptocurrency market. Understand the technology, fundamentals, and any recent developments that may impact prices.
Risk Assessment: Assess your risk tolerance before making any investment decisions. Cryptocurrency markets can be highly volatile, and prices may experience rapid and unpredictable changes.
Diversification: Avoid putting all your funds into a single asset. Diversify your investment portfolio across different asset classes to spread risk.
Long-term Perspective: Consider adopting a long-term investment perspective rather than trying to time the market.
Profit Booking: If you have seen substantial gains and are concerned about a potential market correction, consider taking some profits. This can help you lock in gains and reduce exposure to potential downturns.
Stay Informed: Stay informed about market trends, regulatory developments, and macroeconomic factors that may influence the cryptocurrency market. This information can help you make more informed investment decisions.
(The author is the CEO of Mudrex, a global crypto investment platform)
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.