After experiencing periods of relative stagnation, the leading cryptocurrency experienced a sudden upswing to surpass $43,000 and investors appeared positive about long-term investments in Bitcoin. Yet investors may still face some price volatility given recent ETF approval and long-term holders remained resilient.
Coin Metrics shows that the price of bitcoin was up almost 3% at $43,102.26 at the last trading. Following severe losses, it has battled back into the black for the year with the eagerly awaited approval of spot bitcoin ETFs. With a close to $42,000 level, Bitcoin concluded 2023. According to FactSet, it is now up roughly 2% for 2024.
Ether increased by almost 2% to $2,301.89. Cardano’s ADA and Solana’s SOL tokens drove the gains in the cryptocurrency market. They increased by 6% and 4%, in turn.
The main factor influencing the price movement of cryptocurrencies in recent weeks has been Bitcoin ETFs. Some investors were disappointed by the outflows from the Grayscale Bitcoin ETF, but they seemed to subsided last week, so they dismissed their concerns.
A major driver behind this price surge has been US Securities and Exchange Commission’s (SEC) approval of a spot bitcoin ETF last month, opening up opportunities for asset managers like BlackRock and Fidelity to offer clients exposure to Bitcoin through taxable brokerage accounts and individual retirement accounts (IRAs). This mark of approval marks an important milestone in Bitcoin history.
Since January 2017 when SEC made their decision, Bitcoin prices have surged 160% year-to-date, prompting investor enthusiasm and spurring massive price gains. But despite these gains, many critics still view Bitcoin as dead or scammy. When Bitcoin hit $3,000 following an meteoric rally in 2017, Nobel Prize-winning economist Robert Shiller and Mark Cuban both called for its bubble to burst. When its value dropped back below that threshold in 2018, both men again called for its pop.
Investors could also be anticipating a rate hike from the Federal Reserve next week. At present, they have maintained steady interest rates while signaling they will wait and observe how the economy performs before increasing them again – this could boost risk-taking and tech stocks, providing another positive signal for bitcoin market performance.
Unrelated to ETF news, other factors could also be helping drive up Bitcoin prices. Outflows from Grayscale GBTC ETF have begun to moderate, while Google’s updated Ad Policy now permits crypto ETFs and bitcoin derivatives ETFs to advertise on its search engine.
Bitcoin is a virtual currency that uses cryptography to verify transactions and record them in a public distributed ledger called blockchain. Designed as a secure, fast and decentralized currency system, bitcoin serves multiple uses aside from serving as money itself such as serving as an asset store of value or participating in software programs.
MicroStrategy’s investor appeal lies primarily with its ownership of bitcoin, unlike that of many of its technology peers which depend heavily on revenue growth and market share gains to boost their stock prices. Since mid-2020, the company began purchasing bitcoins, amassing 174,530 worth approximately $7.65 billion as of late Friday night – leading to a remarkable 749% gain and becoming one of the best performing stocks on Nasdaq 100. As an extra incentive, this company has never issued any dividends – suggesting they are keeping most of their earnings for themselves. Furthermore, being one of few publicly listed firms without significant debt loads increases the odds that its buyback program and dividend payments remain effective – becoming an attractive alternative to bitcoin funds for investors.
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