Why Bitcoin again set a growth record
The bitcoin exchange rate has updated the maximum of the current year, surpassing the mark of $30.6 thousand. The most popular cryptocurrency has risen in price by 5% in a day, and almost doubled since the beginning of the year. Although this is still very far from the historical top indicators, the return of the crypt in 2023 came as a surprise to investors – until recently it was “buried” by all but the most avid enthusiasts. About the reasons for the current rise of bitcoin and its new prospects – in the material of bitcoinlinux.
Growth without hype
Cryptocurrencies and bitcoin in the first place remain extremely volatile assets that have already experienced a series of ups and downs.. In 2013, bitcoin, which started the year at $20, quickly approached $1,000 for the first time, but then fell by half in just a month.
On an even larger scale, history repeated itself in 2017-2018, when other cryptocurrencies that began to gain popularity also joined the process. In 2017, Bitcoin went from less than $1,000 to $2,000, but lost 60% of its value within a few days. A new collapse followed at the beginning of the pandemic, after which another, extremely long bull market came, which ended only in the spring of 2022. Since then, Bitcoin has lost two-thirds of its value, and Ethereum has lost almost three-quarters.
The reasons for the new huge failure of cryptocurrencies were the growth of geopolitical tensions, numerous fraud scandals, and the collapse of the Sam Bankman-Freed FTX exchange. But first of all, independent digital currencies collapsed due to the increase in rates by the largest central banks, which led to the flight of investors from high-risk assets and a decrease in liquidity in the markets. This time it seemed that the fall could be final.
Nevertheless, the first half of 2023 for bitcoin and other currencies turned out to be relatively successful, refuting the apocalyptic predictions of some analysts. Although the current bitcoin rate is still more than two times inferior to historical highs and there is no need to talk about growth to hundreds of thousands of dollars, the situation has generally stabilized.
The current recovery is taking place, which is typical, against the backdrop of a very negative news background. American regulators continue to put pressure on the crypto market with lawsuits (for example, in June, the US Securities and Exchange Commission (SEC) opened cases against the leading crypto exchanges – Coinbase and Binance), and the position on cryptocurrencies adopted by the American administration in March can hardly be considered favorable.
Reasons for takeoff
According to the analyst of FG “Finam” Leonid Delitsyn, The medium-term trend that is driving Bitcoin growth is an increase in the amount of money available to buy cryptocurrencies. Many private events contribute to it, such as the increase in the US national debt threshold, economic stimulus measures, etc. The main factor in the rise of bitcoin in recent days was the launch on Tuesday, June 20, of the EDX Market crypto exchange.
– This is an American structure created by several large investment funds, such as Fidelity Investment, which manage trillions of dollars. The securities commission does not object to the opening of this crypto exchange, and crypto market players expect that thanks to this project, new buyers will appear who will bring new money, the expert explained.
According to financial analyst Artem Zvezdin, cryptocurrencies will continue to grow, for which there are several reasons. The first and most important factor is the stabilization of financial markets in connection with the slowdown in the growth of FRS rates.
– Investors, expecting growth, shift their funds to risky assets, for this reason, the markets have been growing quite actively over the past few days. Moreover, this is connected not only with cryptocurrencies, but also with the stock market as a whole. Inflation in the United States has stabilized, and at the same time, investors are positive about the situation,” the source comments.
He added that the SEC is trying to start actively regulating the activities of cryptocurrencies, which leads to their fall in the short term. However, in the long run, investors like it. The demand for cryptocurrencies from players in the US, Europe and other Western countries is huge, Zvezdin notes. Regulation will allow the giants of the investment world to enter the market, which are currently unable to do so due to confusing legislation and the lack of a legal platform, as well as the lack of guarantees for the performance of cryptocurrency platforms.
The latter are also improving. As the interlocutor of bitcoinlinux noted, unlike other exchanges where cryptocurrency assets are located on the site itself, EDX Markets does not store investors’ money, but simply provides access to the exchange between participants. Thus, players can make exchange transactions without fear of the risk of blocking the assets of the cryptocurrency exchange or the risk of its bankruptcy.
According to Nurzhan Berikbolov, executive director of the XIVE branch in Russia, bitcoin is already close to a period of new growth.
— A return to historical highs is inevitable. Analysts believe this will happen towards the end of 2024. Large holdings buy bitcoin in a portfolio of assets as part of diversification, use in different countries is increasing every month, and it has long been possible to pay for services and goods in cryptocurrency, he said.
In turn, Leonid Delitsyn notes that An additional impetus to cryptocurrencies is given by the news of the intention of the BlackRock investment holding to create a spot ETF. The filing has already been filed with the SEC and could be reconciled in the fall. Spot ETFs of this kind buy bitcoin in the same amount that their customers buy shares in the ETFs themselves. If successful, a simple mechanism will be created that will allow pension funds to invest in bitcoins, and there are $ 40 trillion behind pension funds, says the expert.
– It is unlikely that pension funds will invest serious amounts in cryptocurrencies in the near future, but when the price of bitcoin rises, they will also want to make money on it. Therefore, demand from their side objectively exists and is restrained only by the regulator. The optimism of the market is based on the hope that the restraining barriers will be weakened, – said Delitsyn.
A bleak future
Although the prospects for cryptocurrencies look quite promising again in the coming months, some of the fundamental problems that face them have not yet been resolved.
First of all, we are talking about the still extremely low speed of transactions, which is literally hundreds of times inferior to those of traditional payment systems. The average time for a transaction is about half an hour, and at peak loads it can increase significantly. In the case of bitcoin, there is also the problem of a colossal energy consumption, which now exceeds the performance of fairly large countries.
Despite all efforts, no solution to these technical difficulties has been achieved. Without it, cryptocurrencies, even with assistance from states (which is far from a foregone conclusion, as current practice shows), will remain extremely risky and speculative assets for the “hot heads” of financial markets, and the scope of their practical application will be very limited.
