The Crypto Rally Continues: Bitcoin is above $52.5K and Bitcoin ETFs Lead the Ongoing BTC Price Rally Leading cryptocurrency Bitcoin maintained its highest level in 2 years, rising as much as $52,5K. Bitcoin’s rise above $52,000 has pushed its market value over $1 trillion. The crypto bull rally had already begun several months ago, but inflation stubbornly resisted falling, increasing uncertainty and delaying the emergence of a positive approach. Despite this, the price of bitcoin has continued to rise for the last few months. During this period, prices increased from $16K to $52K. But, what is going on? Let’s try to understand whether this positive trend will continue or not.
The Main Factors on the Rise of Cryptocurrencies:
We need to focus on these two questions: Will this trend continue from now on? and What is causing the bitcoin price to rise? The answers to these two questions may help us reach a more accurate conclusion. Leaving aside the short-term ups and downs in the price of bitcoin, bull or bear trends are related to the macroeconomic situation. Over the past few years, economic contraction and high inflation have occurred from America to Europe and Asia, especially as the pandemic disrupted production and supply chains. But now that the pandemic has receded, central banks’ fight against inflation seems to have yielded positive results. Indicators show that the US economy in particular is more resilient and strong than the rest of the world. But, from a crypto perspective, this is not the whole story.
The Federal Reserve’s decision to reduce interest rates is a key factor driving the rise in Bitcoin’s price: This means that the value of the dollar and the cost of borrowing will decrease.
This situation suggests that the price of Bitcoin is rising because the Federal Reserve (the Fed) is planning to lower interest rates. When the Fed reduces interest rates, it can make traditional investments like bonds and savings accounts less attractive, leading some investors to seek higher returns in alternative assets like Bitcoin. This increased demand can drive up the price of Bitcoin. Although it is ideal to borrow cheap dollars (since borrowing interest has decreased) and invest in production during this period, people are also investing in gold and digital assets to protect the value of their money or to obtain higher returns. For this reason, assets such as cryptocurrencies can be preferred because although they are quite risky, their return potential is also quite high.
Bitcoin ETFs are Leading Ongoing BTC Price Rally
Another important reason is Bitcoin ETFs. ETFs are influencing the Ongoing Bitcoin (BTC) Price Rise. Bitcoin exchange-traded funds (ETFs) surpassed $2 billion in net inflows last week. Recent research reports indicate that an estimated 75% of new Bitcoin investments come from 10 newly launched spot Bitcoin exchange-traded funds (ETFs), which were approved by the US SEC on January 11.
A spot bitcoin exchange-traded fund (ETF) invests directly in bitcoins as the underlying asset, rather than in derivative contracts based on bitcoin prices as an investment instrument. Spot bitcoin ETFs offer a regulated and accessible way for mainstream investors to invest in the digital currency. Investors can invest in spot bitcoin ETFs as a more accessible and regulated way to benefit from bitcoin’s price movements.
The increased liquidity facilitated by spot bitcoin ETFs allows for stronger movements in the bitcoin market. As the indicators show, there is a strong inflow of money through spot EFT funds.
It seems that the approval of spot bitcoin ETFs will continue to positively affect the stability and acceptance of bitcoin.
Bitcoin Halving
Another reason is the halving process. The next bitcoin halving is likely to occur in April 2024 and could have a dramatic impact on the price of the cryptocurrency.
Bitcoin halving reduces the number of new bitcoins produced by the network. This limits the supply of new coins, thus affecting the supply and demand balance, so prices may rise if demand remains strong.
While this has occurred in the months before and after previous halvings (causing the price of Bitcoin to appreciate rapidly), the circumstances surrounding each halving are different, and demand for Bitcoin can fluctuate wildly.
However, It seems more likely that the Bitcoin price will follow a similar pattern to the previous three halvings and that it will rise after the event due to the restriction of the supply of new coins.
The halving process, which will reduce the Bitcoin supply, also supported the upward movement of cryptocurrencies.
Large-Scale Sell-Off Threatens Bitcoin
While Bitcoin’s recent rally has caused great enthusiasm, large-scale selling threatens to disrupt market sentiment and potentially disrupt the current bullish trajectory. Market participants are closely monitoring developments regarding these upcoming sales while evaluating their potential impact on Bitcoin’s price dynamics and overall market sentiment. Bitcoin’s resilience in overcoming these challenges will serve as a litmus test for its strength and resilience in the face of external pressures.
It is necessary to pay attention to short-term fluctuations.
Strong short-term fluctuations may occur, especially when it comes to the sale of Genesis shares and government-held bitcoins. Therefore, I think it would be less risky for investors to avoid investing in the derivative bitcoin market and instead trade in spot bitcoin markets. Of course, investors should make their own decisions based on their research.
