Why Is Bitcoin’s Price Rising?
Lately, the rapid rise in Bitcoin’s price has left a lot of people excited. At the time of writing, (Feb 27, 2024) BTC $58K for the first time since Dec. 2021 with a market capitalization of $1.2 trillion. Some say it’s because of the upcoming ETF news, but a closer look shows there’s more to it. Let’s Look at the factors behind Bitcoin’s rise in price and explore how to navigate that.
ETF Approval
The excitement over Bitcoin’s price surge was largely attributed to the approval of ETFs. This approval indicates a significant move toward institutional acceptance, making it easier for traditional investors to join the Bitcoin space. As regulatory obstacles are removed, there’s an expectation of increased institutional demand for Bitcoin, leading to price hikes.
Supply-Demand
Fundamentally, the laws of supply and demand govern price movements in all markets, including cryptocurrencies.
Bitcoin’s price is pumping because there’s not much of it available and more people want to buy it. As fewer Bitcoins are available on exchanges and smaller players are buying more, there’s less Bitcoin that can be quickly sold. So, even a small increase in people wanting to buy Bitcoin can cause the price to shoot up quickly, especially when people who bet the price would go down have to buy to cover their bets and others are buying just because they think the price will keep going up.
Halving Cycles
Bitcoin’s halving cycles, occurring roughly every four years, underpin its price movements. Historical data reveals recurrent patterns where supply reductions precede price surges. This cyclical behavior, driven by a predetermined supply schedule, signals potential future price appreciation, corroborated by recent market movements.
FOMO
In the crypto market, emotions often dictate the direction of asset prices. Fueled by hype and FOMO (Fear of Missing Out), investors rush to buy into projects with little regard for their intrinsic value or long-term prospects. This herd mentality can lead to irrational exuberance, causing prices to soar to major highs.
Macro Factors
Against a backdrop of geopolitical tensions and macroeconomic uncertainties, Bitcoin emerges as a perceived safe haven asset. Divergences between gold prices and real rates underscore a growing preference for alternative stores of value, including Bitcoin. As traditional markets grapple with volatility, Bitcoin’s resilience becomes increasingly apparent.
Typical bull cyc;e
Regular bitcoin investors may have noticed something interesting: Bitcoin often gets a big price boost in the last part of the year. This happens pretty regularly, with the fourth quarter usually bringing in nice profits for Bitcoin owners. As we get closer to the end of the year, the idea of another price jump is appealing to investors, which is helping to drive up prices right now.
Bitcoin Upgrade
In the background, the Bitcoin network is going through a significant upgrade called Taproot. This upgrade isn’t just about improving privacy and efficiency; it’s also opening up new avenues for smart contract capabilities. In a field where innovation reigns supreme, Taproot stands out, drawing in investors looking for the latest advancements. The excitement around Taproot’s rollout is contributing to a more optimistic outlook in the market.
What to Do With the Rising Bitcoin Price
Try DCA
In times of high market excitement, you should plan and employ trading strategies like Dollar-cost averaging to lower risks. This strategy lets you handle market ups and downs while aiming for long-term gains. When you carefully weigh the chances of risks and adjust your portfolio distribution accordingly, you gain the ability to ride out market swings with confidence.
Perform in-depth research
The past bull markets show that as prices are increasing, the rates of scam also skyrockets. It’s important to conduct extensive research before committing to any project or token. Take heed from past bull markets, rife with scams and questionable investment ventures. Diligence is key to grasping the authenticity and possible risks tied to any investment.
Wrapping Up
The surge in Bitcoin’s price goes beyond mere speculation. It’s driven by a mix of factors like supply and demand shifts, halving cycles, and broader economic trends. With more institutions getting on board, Bitcoin’s rise looks set to continue, though there may be bumps along the way. If you are looking to invest, you should remember that the crypto market is highly volatile and investing does not automatically mean a win. It is very important to not invest more than you can afford to lose and always do your research.
Disclaimer: The opinions expressed in this blog are solely those of the writer and not of this platform.
