Bitcoin reaches new peak following FTX scandal in cryptocurrency market

The Rise of Bitcoin

Bitcoin has reached an all-time high, rebounding less than two years after the crypto exchange FTX’s collapse severely impacted confidence in digital currencies.

Recent Surge

The world’s largest cryptocurrency saw a 4% increase this week, briefly exceeding $68,800 on Tuesday, setting a new record above the previous peak in November 2021. Despite a slight drop to just under $62,000, the price remains over 175% higher than a year ago.

Driving Factors

Recent price surges were fueled by the anticipation and approval of bitcoin exchange traded funds (ETFs) in the U.S., providing access to a broader range of investors. Additionally, the upcoming bitcoin halving event in April will reduce the rate of new coin creation, lowering the supply.

ETF Approval

In January, the U.S. Securities and Exchange Commission approved spot bitcoin ETFs from asset managers like Blackrock, Invesco, and Fidelity. These ETFs hold actual bitcoin, unlike previous versions that invested in futures contracts.

Market Impact

Institutional demand for bitcoin remains strong, with projections indicating a continued rise in popularity as more wealth management platforms offer access to spot bitcoin ETFs. Data suggests significant daily inflows and record highs for these ETFs since their launch.

Bitcoin Halving

The upcoming halving event, occurring every four years, will reduce the rewards for bitcoin mining, making new coin creation slower and supply scarcer. While supply constraints can drive up prices, volatility and external factors can influence bitcoin’s value unpredictably.

Price Volatility and History

Bitcoin’s value has experienced drastic fluctuations, with sudden shifts occurring over short periods. The cryptocurrency’s journey from $5,000 at the start of the pandemic to nearly $69,000 in November 2021 reflected changing market conditions and investor sentiment.

Risk and Caution

Despite the recent excitement surrounding bitcoin, experts warn of the unpredictable nature of crypto investments. Investors should exercise caution and prepare for potential volatility in the digital finance ecosystem, emphasizing the importance of prudent optimism.

Read More of this Story at – 2024-03-06 01:34:15

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