Bitcoin’s price peaked on Wednesday, March 6, surpassing its previous high during the Covid-19 era. Briefly, nearly everyone holding Bitcoin was in profit. However, the price has since retreated. Does this surge hint at a long-term upward trend for Bitcoin? Here are the essentials of the latest crypto wave.
- Bitcoin’s price soared, breaking past $69,000 due, in part, to enthusiasm over ETFs.
- It achieved its highest level, surpassing its 2021 peak.
- In 2022, rising interest rates and the implosion of some big crypto exchanges caused a downturn in cryptocurrency values.
What’s new?
Bitcoin set a new record, its first in over two years. But the high was short-lived. Yet, it has risen over 40 per cent since the beginning of the year, prompting many traders to secure their profits.
Why it matters
The Bitcoin price surge is probably due to significant investment in new Bitcoin ETFs. However, liquidity for this well-known token has yet to recover fully. The rally’s drivers and its longevity are still up for debate.
In numbers
The recent steep climb began last week, driven by a spike in purchases on a specific exchange. The price jumped up 2.5 per cent to $69,191.95 in New York. At its Wednesday peak, Bitcoin was up about 63 per cent for 2024.
Since its inception, Bitcoin’s value has swung wildly. Initially hitting $1,000 in 2013, it experienced a dip before soaring to $68,991.85 on November 10, 2021, boosted by global stimulus responses to Covid-19. In spring 2022, values plunged as several prominent crypto firms were exposed as fraudulent and regulatory action squeezed the market. The trend reversed and reached a new record high on March 6.
Going deeper
After a decade of repeated rejections, on January 10, the Securities and Exchange Commission in the United States green-lit 11 Bitcoin ETFs. These funds, which include financial institutions Blackrock and Fidelity, mirrored Bitcoin’s spot price and have attracted over $7.5 billion since their January 11 debut. The enthusiasm for these ETFs in January, which simplified investing in Bitcoin, explains the rally’s extent. A new wave of investment has resulted in over 60 per cent gains.
While Bitcoin grabbed headlines with ETF launches and a future cut in supply growth, other cryptocurrencies like Ether still lagged behind their record highs, highlighting the intense focus on Bitcoin.
Expert opinion
“Bitcoin has been under intense regulatory pressure in countries like India and China, but as long as even a single major economy like the US supports Bitcoin, its positive ramifications will flow into every other world economy,” digital currency expert and advocate Dr Sanjay Sharma told India Today.
Big picture
Bitcoin’s price fluctuations impact not just crypto investors but traditional market participants as well. Over the last five years, data reveals Bitcoin’s price movements align with major asset classes, marking its growing role in the global investment scene.
Bitcoin closely mirrors trends in significant stock markets, such as the US S&P 500 and India’s SENSEX and NIFTY, suggesting a correlation. While there’s a similar trend with gold, it could be more pronounced. Bitcoin shows minimal effect on US bonds, indicating their stability against Bitcoin’s volatility. This integration suggests increasing interconnection between markets. However, the correlation should not be confused with causation. These observations, based on historical data, could shift with market dynamics.
