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Bitcoin Rally: Token Hits New Record High of $71,000

cryptocurrency bitcoin
The token’s market capitalization to $1.40 trillion. Credit: Onov3065, CC BY-SA 4.0

Bitcoin prices hit a new record high of above $71,000 in early trading on Monday continuing its stunning rally in 2024. It later dropped to just above $65,000. Since January Bitcoin prices have rallied more than 67 percent.

The jump in Bitcoin price lifted the token’s market capitalization to $1.40 trillion.

The cryptocurrency prices have been boosted by a flood of cash into new spot bitcoin exchange-traded funds (ETF) as well as hopes that the US Federal Reserve will soon cut interest rates.

After years of intense lobbying and litigation by Wall Street, nine exchange-traded funds were launched in January aimed at making it easier to invest in bitcoin.

Exchange-traded funds are organized to invest in pools of something, usually stocks. In this case, the ETFs were organized to buy into bitcoin and take the risk and costs of taking positions in the crypto off investors’ hands. The ETFs have pulled in more than $52 billion in new money in about two months.

Bitcoin halving is coming in April

In April comes the second big influence on the price of bitcoin. It’s called halving and works because of the way bitcoin is structured.

Every transaction is registered in a block and verified by solving complex math problems using computers. Once the problems are solved, the block goes at the end of what’s called the blockchain.

When a block goes into the chain, as Quartz explains, it creates a number of bitcoins. Whoever gets a block into the chain gets rewarded with 6.25 bitcoin. Each coin is worth about $388,000. In April, the reward rate is expected to be cut in half to 3.125 bitcoin.

The halving, which occurs every four years or so, is expected to occur around April 21 and will fuel a bitcoin price jump.

Aaron Arnold, the co-founder of the influential crypto markets channel “Altcoin Daily,” believes prices could hit $80,000.

That’s because halving is designed to create scarcity. it’s like gold, which has a limited global supply and has evolved into an asset investors can use as a hedge against inflation and over-speculation.

Bitcoin was designed to have a limited supply. The original code that created it allows a maximum of 21 million coins, which might take several decades to distribute.

Bitcoin price movements have been influenced by several factors, including institutional adoption, macroeconomic trends, regulatory developments, and investor sentiment. Moreover, the recent remark by Fed Chair Jerome Powell reaffirmed the interest rate cut later this year through a careful approach.

Skeptics warn investors attracted by the Bitcoin rally

Bitcoin enthusiasts and promoters are ecstatic with its performance, convinced it’s heading to $100,000 and ultimately will vie with gold as a way to hedge one’s wealth against inflation and economic turmoil.

Skeptics abound, worried bitcoin is getting way too expensive and potentially ruinous to naive investors.

JPMorgan Chase CEO Jamie Dimon has called Bitcoin a fraud, worthless and no better than a pet rock.

There’s no disputing its volatility, says The Street and gives the following example: Bitcoin jumped nearly 8 percent on Monday, dropped 8.6 percent the next day and rose 8.5% on Wednesday.

By many traditional momentum measures, bitcoin at current levels is overbought and increasingly vulnerable to an abrupt selloff.

Its relative strength index has been largely above 75 since early February, a key measure on whether an investment is overbought.

Related: Gold and Bitcoin Peaks: Are We Heading to Another Dot-Com Bubble?

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