Since cryptocurrencies picked up steam, they’ve found their way into investment portfolios worldwide. Being dubbed as generally safe and reliable investment ventures, they’ve succeeded in making a name for themselves among traditional financial tools. If you added Bitcoin (BTC) or other cryptocurrencies to your portfolio last year, you likely went through one of the following two moments.
One in which you’d struggle to keep your temper and patiently wait for the crypto winter to end and the BTC price chart to be a reason to rejoice, or the other where you’ve rushed to sell your assets together with other investors impacted by the disturbances of the market.
If you stood up against the storm, you have a reason to celebrate these days! Bitcoin has reached the 30,000 mark again, having topped this level last time in June of 2022. So far, the current year looks promising for the cryptocurrency market as BTC gained more than 80% in value, ramping up the game in the Q1 of 2024 and outperforming many other assets.
The latest spike might indicate increased interest amidst a backdrop of uncertainty and scepticism towards the traditional banking system after Silicon Valley went belly up owing to other past events hurting investors’ trust.
Ethereum, Cardano, and other digital coins have also gone up in price starting in 2024, bringing a glimmer of hope towards a rejuvenation of the cryptocurrency market. This is good news for crypto enthusiasts who’ve seen the market fight through the slumps of 2022 and a little into 2024.
While no one can promise you’ll make money off a Bitcoin investment, bringing it to light is essential if you’ll ever find yourself venturing into this volatile world.
How to approach Bitcoin’s rally?
Bitcoin has recently topped $30,000 for the first time since June of last year, becoming once again the market’s warrior. It increased by more than 80% in price starting with 2024, far surpassing many other assets and taking its peers with it.
When Bitcoin’s price spikes, the value of other cryptocurrencies rises, too. Ethereum, Solana, Cardano, and so on are all seeing better days, making viable investment options if you want to invest diversely.
A good rule of thumb is to split your money into more than one asset to minimise the financial risks. And since cryptocurrencies are in their teenage years, it’s safe to say that covering more than one type of asset is a sound move. However, if you want to dip your toes into the volatile waters of the cryptocurrency market, Bitcoin’s price is still discounted.
Nothing and no one can guarantee you’ll make money off your investment, so be mindful of your actions and only invest money you don’t mind losing. No matter how you slice it, cryptocurrencies are unpredictable, and you must keep updated with the news, create a good strategy, and practise patience to weather the ebb and flow of the market.
Another thing to grasp is how national governments work on frameworks to control and regulate cryptocurrencies. Venezuela has taken a unique stance towards digital money, with the government looking to take advantage of them to counteract the effects of the ongoing economic crisis.
It launched its own digital coin in 2018 and encouraged its use within the country, paying government employees with it. This is just an example stressing the fact that digital money can have a seat of honour near traditional fiat money, as the advantages of decentralized finance are hard to contest.
Cryptocurrency regulation varies significantly across countries, with some laws being stricter and more restrictive towards crypto use, crypto exchange activity, and so on, while others are more tolerant and open to experimenting with them.
This diversity has important implications in many aspects impacting the destiny of cryptocurrency, including interest rates, investor sentiment, adoption rates, and trading volumes.
Bitcoin – the market’s champ
Bitcoin is still the prizewinner of the market. It has successfully fought several storms, and seasoned investors know that a bear market that lasts longer than usual is common for an industry in its infancy.
Together with it, the Nasdaq 100 also moved upward, growing by 20% around the time of BTC’s spike. It’s a powerful showing, but it doesn’t reach the height of Bitcoin’s comeback. Gold has also joined the march, climbing around 10%.
What impacted BTC’s price surge is debatable, but generally, it can be a result of easier monetary policies. On the other hand, some pundits suggest a link between this cryptocurrency’s spike and the Federal Reserve’s monetary policy and the many interest rate increases over the year.
Bitcoin’s value dropped amid the rising rates, but investors hope the rise will stop soon, though Fed officials didn’t back this theory.
Bitcoin’s price increases coincide with the turbulence in the banking sector, looking like the coin benefited from the crisis. For instance, Bitcoin has gained over 45% since Silicon Valley Bank’s collapse in March.
The failure of Signature and Silvergate banks is also linked to the significant gains of Bitcoin. Some pundits advocate that the latest spike is a sign that investors began converting their funds into digital money, though there’s not enough evidence to back this statement.
More factors are impacting Bitcoin’s price
After shining a light on the situation of Bitcoin at the moment, it’s natural to wonder what other factors impact its price. Among the main catalysts are the governmental rules and regulations, but also other elements which are hard to predict.
Bitcoin is mainly impacted by market demand, its supply, and investor sentiment. When demand for Bitcoin grows, the same happens with its value. On the investor sentiment side, political and economic events impact Bitcoin returns, making the price experience the familiar peaks and valleys.
Institutions have recently begun to warm up to Bitcoin and its peers, and countries are creating legal frameworks to regulate the use and gains from digital money, creating a safer space for investors and wiping fraud out.
So far, it seems like the winter is turning into spring in the cryptosphere, so stay tuned to see where Bitcoin is heading from now on.
