One of the main drivers of Bitcoin’s recent rally is the growing demand from institutional investors
Bitcoin, the world’s largest and most popular cryptocurrency, reached a new milestone on Wednesday, February 14, 2024, as it surged past $51,000 for the first time since December 2021. The digital currency has gained more than 20% since the start of the year. Several factors were behind the boost such as
increased institutional adoption, positive market sentiment, and anticipation of the upcoming Bitcoin halving event in April.
According to data from CoinDesk, bitcoin hit an intraday high of $51,348 at 8:12 a.m. UTC, the highest level since December 16, 2021, when it reached $51,683. The cryptocurrency has since retraced slightly, trading at around $50,800 as of 10:00 a.m. UTC, but still up by 4% on the day. Bitcoin’s market capitalization has also climbed back to the $1 trillion mark, a level not seen since April 2022.
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Bitcoin rise factors
One of the main drivers of Bitcoin’s recent rally is the growing demand from institutional investors, who see the cryptocurrency as a hedge against inflation and currency devaluation. Several prominent companies, such as Tesla, MicroStrategy, Square, and PayPal, have added Bitcoin to their balance sheets or enabled crypto payments on their platforms. Moreover, the launch of several spot bitcoin exchange-traded funds (ETFs) in the U.S. and Canada has provided more avenues for retail and institutional investors to access the crypto market.
Another factor that has fueled Bitcoin’s rise is the positive sentiment among crypto enthusiasts, who expect the cryptocurrency to reach new highs soon. Many analysts and experts have predicted that Bitcoin could surpass its previous all-time high of $69,800, which was set on November 8, 2021, and potentially reach six figures or more. Some of the bullish indicators include the increasing hash rate, the decreasing supply, and the rising adoption of the Lightning Network, a layer-two solution that enables fast and cheap bitcoin transactions.
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Bitcoin Halving
The upcoming Bitcoin halving is expected to occur in April 2024. The halving is a process that reduces the number of new bitcoins generated by miners every 10 minutes by 50%. To explain the annual inflation rate of bitcoin will drop from 1.8% to 0.9%, making it scarcer and more valuable. The halving also increases the mining difficulty, which makes it harder and more expensive for miners to produce new bitcoins. The halving has been a catalyst for Bitcoin’s price appreciation, as it creates a supply shock and a demand increase.
Bitcoin’s breakthrough of the $51,000 barrier is a significant achievement for the cryptocurrency. Demonstrates its resilience and strength in the face of various challenges and uncertainties. However, Bitcoin is also known for its volatility and unpredictability, and it may face some resistance and correction along the way. Therefore, investors and traders should exercise caution and due diligence when dealing with the crypto market.
