Friday, April 19, 2024

Bitcoin reaches record high at nearly $50,000

Bitcoin (BTC) hit its highest level for the first time since December 2021 as the cryptocurrency’s value surged to $48,750 on Feb. 12.

The significant increase in coin’s price is mainly due to the impact of the recent approval by the United States Securities and Exchange Commission (US SEC) of BTC’s spot exchange-trade fund (ETF), which is further aided by the market’s anticipation for BTC halving this year, according to Ryan Lee, chief analyst at Bitget Research.

On Jan. 10, BTC ETF gained approval from the US SEC allowing investors around the world to invest in the cryptocurrency through compliance channels. The approval “undoubtedly brings more attention and capital injection to BTC,” Lee said.

Investing.com defines BTC ETF as an investment fund that tracks the price of BTC enabling investors to participate in the price fluctuations without the need to buy or store the cryptocurrency directly. Just like mutual funds, stocks, and bonds, BTC ETF trades on the stock market.

Although the cryptocurrency price dipped shortly after the ETF approval due to the selling of some equity holders of Grayscale Bitcoin Trust, a crypto asset management company, it has since recovered and maintained its position as the sell-off came to an end with the market seeing daily net inflows in and out.

In early January alone, BTC trading volumes saw a 300-percent growth from $ 16 billion to $ 50 billion.

Historically, the coin’s value rose the succeeding year after every BTC halving event.

For instance, during the first halving in 2012, the coin’s price dramatically increased from $ 13 to $ 1,152 in December 2013.

A similar trend was experienced after the second and third halving in 2016 and 2020, respectively. From $664 in 2016, the coin’s price remarkably increased to $17,760 in 2017 and from $9,734 in 2020 to $67,549 in 2021.

A fourth halving will likely occur in April 2024 and analysts expect that cryptocurrency price will again surpass its previous all-time high record.

“At the same time, the US Federal Reserve will also start an interest rate cut cycle this year, which is a good signal for risk assets and emerging markets,” Lee explained.

“As of now, there is no upcoming news that may have a price correlation with BTC except for BTC halving,” Lee added.

Bitcoin Halving

The BTC halving, often referred to simply as “the halving,” is a pre-programmed event that occurs approximately every four years, or after every 210,000 blocks are mined.

The halving event is a pivotal moment in the cryptocurrency world due to its profound effect on the coin’s price.

Essentially, it reduces the rate at which new coins are created and subsequently lowers the available amount of new coins entering the network. As such, an upward pressure on prices is created.

Originally worth next to nothing when it was launched in 2009, the cryptocurrency has massively grown in value. It has experienced many dips and pumps but nearly reaching $ 50,000 in the second week of February this year is a record high. In the last bull market, the price of BTC was only between $ 38,000 and $ 48,000.

Lee analyzed that BTC built a series of excellent projects such as Babylon, UniSat Wallet, and Bioniq, among others, which contributed to a flourishing ecosystem and increased demand for the cryptocurrency.

“This allows more players to participate in the BTC ecosystem increasing its awareness and adoption globally,” he said.

Growing Global Demand

BlackRock, the world’s largest asset management, has opened its own sales network to sell Bitcoin ETFs. This may result in several favorable improvements for investors, including more accurate tracking of BTC values and more affordable investment options.

During its early years, BTC was known only to a few and accessible only to the tech-savvy. As of 2023, Triple-A, a global services company, estimated global crypto ownership rates at 4.2 percent with over 420 million crypto users worldwide.

Financial analysts predicted that the global blockchain market will continue to grow.

Although the Philippines remains cash-reliant according to a fintech report, adoption of cryptocurrencies and digital payment has steadily and positively increased in recent years.

The Philippines is ranked sixth in the world in the 2023 Global Crypto Adoption Index according to American-based blockchain analysis firm Chainalysis.

The index measures where the most people are putting the biggest share of their money into cryptocurrency. This is a drop from the previous year when the country ranked second next to Vietnam in 2022.

Nearly seven million Filipinos or 6.13 percent of the total population own cryptocurrency per Triple-A estimates. It is often used for online payments because transactions are fast and low-cost.

While cryptocurrency transactions are legal in the Philippines, crypto coins are not considered as legal tender by the Bangko Sentral ng Pilipinas (BSP) because they are not issued by the BSP.

In 2021, the BSP has issued useful guidelines for those who would like to invest in cryptocurrency in the Philippines.

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