Bitcoin, the world’s most popular cryptocurrency, experienced another rally on Wednesday, accompanied by a volatile trading session. At the same time, ether, the second-largest cryptocurrency, surged by almost 10%. The frenzy surrounding cryptocurrencies shows no signs of slowing down, captivating the investment community.
Bitcoin reached a session high of $67,645, marking a 6.8% increase, after a 6% drop the previous day from its record high of over $69,000. Currently, it stands at $66,896, representing a 5.7% increase. Ether, on the other hand, soared by 9.8% to its highest value since January 2022. It is currently up 8.6% at $3,827. Bitcoin has already seen a 55% surge this year, driven by investors pouring money into U.S. spot exchange-traded crypto products and the anticipation of global interest rate reductions.
The recent influx of billions of dollars into ETFs, coupled with the expectation of an ethereum upgrade and bitcoin “halving,” which slows down the production of new bitcoins, has provided additional support to the market. Lennix Lai, the global chief commercial officer at crypto exchange OKX, believes that this trend indicates a higher level of mainstream acceptance of bitcoin than ever before. The approval of 11 spot bitcoin ETFs by the U.S. Securities and Exchange Commission in January marked a significant milestone for the industry, following a challenging period plagued by bankruptcies and scandals.
Even institutional investors, who were once hesitant about cryptocurrencies due to their volatile nature, have started committing long-term investments. This influx of institutional money is expected to sustain the current rally. The optimism surrounding bitcoin has also spilled over to other digital tokens, particularly ether, which has seen a 60% increase since the beginning of the year. However, some experts caution against the speculative nature of these assets.
Bitcoin’s behavior on Tuesday, when it reached a record high and then sharply reversed course, falling more than 10% below the $60,000 level, is a classic example of its volatility. Matt Simpson, senior market analyst at City Index, describes it as “chewing you up then spitting you back out.” This phase of volatility and erratic movements is typical when bitcoin reaches new highs.
Jim Reid, a strategist at Deutsche Bank, points out that bitcoin still has a way to go before reaching an all-time high in real terms. Adjusting for inflation, consumer prices have increased by over 10% since the previous peak in November 2021. In today’s prices, that would put bitcoin above $75,000.
The cryptocurrency market continues to captivate investors with its rapid rise and fall. While the mainstream acceptance of bitcoin is growing, caution is still advised due to the speculative nature of these assets. As the crypto mania sweeps through the investment community, it remains to be seen how long this rally will last and what challenges lie ahead for the cryptocurrency market.
