Why Bitcoin Is Surging Again

In the last several months, the value of Bitcoin growth—the biggest cryptocurrency in the world—has skyrocketed. From a low of $17,600 in June, the Bitcoin price has risen to over $41,000 as of December 5, 2023. Many investors are anticipating that Bitcoin will soon reclaim its all-time milestone. The previous highest point was $69,000, and traders are quite excited by this rally. There might be many reasons for the recent surge in the value of Bitcoin.

How Does Bitcoin Work?

Bitcoin is an anonymous digital currency. It was invented in 2009 by an unidentified individual or group under the pseudonym Satoshi Nakamoto. Bitcoin is widely considered the forerunner of cryptocurrencies. It runs on blockchain technology, which records all transactions across a network of computers, unlike conventional currencies issued by governments and central banks.

Bitcoin’s key features include:

• Decentralization. There is no way for any government or banking institution to control or change Bitcoin. This scattered structure makes it hard to block or seize.
• Immutability. Once a transaction is recorded on the blockchain, it can’t be taken back. It protects the Bitcoin network’s stability and stops scams.
• Transparency. The public blockchain records every Bitcoin transaction, making them easily traceable and transparent. This openness helps in the fight against corruption and fraud.

Bitcoin transactions are recorded on the blockchain and validated by network nodes using encryption. The 21 million unit restriction on the supply of Bitcoin gives the cryptocurrency a deflationary edge. Its expanding awareness and growing institutional interest have contributed to its scarcity, which has increased its appeal as a digital asset.

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Regulatory Approval for Bitcoin ETFs

Anticipation that large investing companies would soon get regulatory licenses to sell spot bitcoin exchange-traded funds is a significant driver of the current increase in Bitcoin. Investors will access the cryptocurrency market in a controlled and convenient manner by purchasing and selling spot bitcoin ETFs, which are financial vehicles similar to equities. A wider variety of investors may be able to participate in the cryptocurrency market if federal authorities approve several bitcoin ETFs as early as January.

According to Moody’s senior product director, Yiannis Giokas, more and more investment managers are getting into the Bitcoin spot ETF game. This means institutional and retail investors, including the more cautious ones, will feel more at ease participating in this dynamic market.

Institutional Adoption

One of the major developments in the cryptocurrency market recently is the increasing number of huge financial institutions purchasing Bitcoin. Institutional investors formerly saw Bitcoin as an investment that was too risky. However, institutional investors have started to take note of Bitcoin as it has become more established.

Many prominent organizations and businesses declared their intention to invest in Bitcoin in 2022. One software business that bought more than 100,000 Bitcoin is MicroStrategy. Electric vehicle manufacturer Tesla is one of the businesses that has bought Bitcoin and begun accepting it as payment.

A huge indicator of confidence in Bitcoin is the rapid acceptance of the cryptocurrency by institutional investors. This means that big money thinks Bitcoin may be a good investment in the long run.

Inflation Hedge

Inflation in the US has hit a 40-year high, as previously stated. The demand for assets with inflation protection features has risen as a result. Blockchain technology, limited supply, and independence from governments and central banks make Bitcoin stand out among these assets.

Such a condition threatens the buying power of fiat currencies such as the US dollar. This makes prices go up. Consequently, reserved fiat money will lose purchasing power as time goes on.

In contrast, Bitcoin will never lose value due to inflation. This is because there will only be 21 million coins in use. Because of this, Bitcoin is seen as a better long-term investment than traditional currencies.

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Political Uncertainty

This latest risk in Bitcoin’s value is partly due to the continuing war between Ukraine and Russia. The factor has heightened market volatility and anxiety throughout the world. Therefore, investors are seeking assets that might be seen as safe zones, and Bitcoin fits the bill.

Due to its independence from government regulation and economic uncertainty, Bitcoin has gained a reputation as a refuge asset. As an example, the government cannot control or intervene with Bitcoin.

Summing Up

Several reasons have contributed to the recent increase in Bitcoin’s value. These include the following: increased demand due to political instability, rising institutional acceptance, the expectation of regulatory permission for ETFs, and its use as a hedge against inflation. The ever-changing market circumstances highlight Bitcoin’s growing reputation as a valuable and resilient asset.