The scandal surrounding the crypto exchange FTX a good year ago seems to have been forgotten. The price of Bitcoin is rising and rising. However, the most recent top mark was fallen below again after one day.
The digital currency Bitcoin has fallen slightly again after its recent high. On Tuesday, Bitcoin initially claimed the psychologically important mark of over $50,000. However, profit-taking in the afternoon ensured that the price leveled off again below $49,000. The $50,000 threshold was exceeded on Monday evening for the first time in more than two years. Other digital stocks such as Ether also increased significantly. At a price of $48,900, Bitcoin is still recording a 7-day increase of over 14 percent.
Bitcoin funds lead to price euphoria
Bitcoin has been benefiting from increasing interest for some time. Apparently the introduction of special Bitcoin funds is becoming increasingly noticeable. These funds were approved by the US Securities and Exchange Commission in January, but this only led to short-term price euphoria. “The launch of the ETF investment vehicles is now beginning to bear fruit,” commented crypto expert Timo Emden from Emden Research. “The capital inflow is grist for the investors’ mill.”
The approved spot ETFs on Bitcoin are novel because they allow investors for the first time to invest in Bitcoin without having to directly purchase the digital currency itself. According to calculations by the Bloomberg news agency, the new funds received around $2.8 billion net in the last 30 days. The gross amount is significantly higher, but this also involves reallocations within the crypto industry.
Another upcoming event also makes investors look positively on Bitcoin: the next so-called “Halving” is scheduled for April. This reduces the reward that Bitcoin miners receive for verifying crypto transactions. Ultimately, the process leads to a slower growing supply of Bitcoin, which has so far mostly led to rising prices.
Prices expected to continue rising
James Butterfill, head of research at Coinshares, expects further increases in the coming months. In a conversation with the German Press Agency, the expert compared Bitcoin with the precious metal gold. “Bitcoin and gold are investments. It’s just that Bitcoin is more technically advanced than gold because you can transfer it over the phone or the Internet, for example.”
Investors were looking for alternative stores of value, Butterfill said. The market value of all Bitcoins currently corresponds to around eight percent of the value of all gold holdings worldwide. “If we got to 14 percent, the rate would be $100,000. Some will think I’m crazy if I said that the Bitcoin rate would go to $100,000. But if I said that Bitcoin would be 14 percent of the price in the future That would make up the market value of gold, that sounds quite realistic.”
Meanwhile, consumer advocates continue to warn about the risks. “Today, no one can reliably predict whether Bitcoins, variants thereof or other cryptocurrencies will become established as an alternative to conventional monetary systems in the medium term,” says the consumer advice center. Bitcoins are not recommended as an investment due to the risks involved. The main risks consumer advocates mention are the very strong price fluctuations, including a possible total loss, and the lack of security systems.
Source: Stern
