Sun. Jul 21st, 2024

Earlier on Monday, BitCoin, and other crypto currencies surged to their highest value in 2023. Crypto in particular stood at over $42,000, with investors expecting it to hit $45,000 by March 2024. Here’s why investing in BitCoins should be avoided

Bitcoin surged past the $41,000 mark on Monday during the Asian business day, reaching levels not seen since April 2022 before the Terra crash, while Ether also climbed above $2,200.

The move came after Bitcoin touched the $40,000 threshold in recent days, finally surpassing it and trading at over $41,400 at press time, indicating a 24-hour increase of approximately 5 per cent.

Bitcoin pulls other cryptos as well
Ether, too, experienced a similar percentage rise, reaching $2,240 within the same timeframe. Other top-ten cryptocurrencies witnessed more modest gains, with BNB coin, linked to the Binance exchange, showing a marginal 0.1 per cent decline over the past day.

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The world’s largest cryptocurrency, Bitcoin, had dropped below $40,000 in April 2022 but has been on an upward trajectory in recent months, fueled by optimistic remarks from U.S. central bankers and anticipation surrounding the potential approval of a spot bitcoin exchange-traded fund (ETF) in the United States.

Ether had not surpassed the $2,200 mark since May 2022 but achieved this milestone on Monday, marking a departure from its recent trading patterns.

Direct custody growing
Between November 17 and December 1, Bitcoin holders withdrew 37,000 BTC, indicating a trend toward direct custody of their coins. The surge in Bitcoin’s value coincided with gold reaching a record high of over $2,100 per ounce during early Asian trading hours, driven by dovish comments from Federal Reserve Chairman Jerome Powell.

Analysts, such as Lucy Hu, Senior Analyst at Metalpha, noted that the market is increasingly optimistic about a rate cut in the coming year, with growing bullish sentiment regarding Bitcoin ETF applications from major asset management firms.

Traders hope for better climb
Federal Reserve Chairman Powell’s recent statement that interest rates are now in restrictive territory has contributed to the perception that the tightening cycle has peaked, putting downward pressure on Treasury yields.

Traders have been actively engaging in topside option plays, anticipating Bitcoin’s potential rise to $45,000 by the end of March 2024.

Looking ahead, the upcoming week will feature U.S. ISM services PMI data and non-farm payrolls for December.

A strong non-farm payrolls figure could lead to a reassessment of Fed rate cut expectations for 2024, potentially slowing Bitcoin’s ascent.

Should one invest now?
Although Bitcoin has broken the $40,000 mark after a really long time, now would not be the time to invest in it.

If we are to look at the historic values of Bitcoin, they tend to go up towards the end of the year and typically start rallying upwards in October.

So accurate has been this trend that serious investors even have a name for this phenomenon — Uptober.

Usually, by the time January rolls around, the value of Bitcoin tends to stay high.

Historical data suggests that if one were to get into Bitcoin at the end of the year, they usually enter the market at a high. Yes, there is a chance that the value may go up, but the highest that Bitcoin has ever gone is around $67,567 on November 8th, 2021.

However, on average, Bitcoin had an average value of $36,000 in 2023, and went as low as $25,000 this year. Again, historical data suggests that this dip usually comes around the summer months, and is mainly fuelled by people selling their holdings in a state of panic. Long term investors, tend to favour this period for buying up more bitcoins.

(With inputs from agencies)

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