On Wednesday, Bitcoin experienced its fifth consecutive day of surging, approaching the $60,000 mark. This upswing is propelled by investments flowing into new U.S. spot bitcoin exchange-traded products, contributing to a remarkable 39.7% surge in the cryptocurrency’s value for February. This would represent its most significant monthly rally since late 2020. Cryptocurrency investors are additionally optimistic about the possibility of the Federal Reserve lowering interest rates this year, fostering increased demand for assets that serve as stores of value and can be easily transferred between accounts.
The bitcoin rally sent related stocks higher. Trading platform Coinbase jumped 14%, bitcoin proxy Microstrategy rose 12%, and miner Iris Energy surged 20%. The gains come after the SEC approved two bitcoin ETFs in January. According to analysts, the funds could lead to broader adoption of the digital currency, which has gained in popularity as an alternative asset class as investors seek diversification from traditional investments.
Investors are also expecting a boost from a scheduled event later this month that will reduce the supply of Bitcoin. This so-called “halving” will reduce the number of new bitcoins that miners can produce, lowering their earnings and potentially pushing up the price as demand for the currency increases.
Analysts say it’s too early to tell whether the halving will significantly impact the price, but many are bullish. Cryptocurrency traders expect the halving to be followed by increased institutional investment in Bitcoin and other blockchain-based digital assets.
Unlike traditional currencies, which central banks issue, bitcoin is created and maintained on a public ledger called the blockchain. Its creator remains anonymous, but the digital currency has gained traction among investors and consumers who want to avoid regulation and the risks associated with traditional banking.
Bitcoin has experienced several massive bull runs in its history, including one that began in 2013 and lasted until late 2017, when the price of the cryptocurrency tumbled from a high above $15,000 to less than $4,000. During this period, the crypto gained mainstream acceptance and saw increasing media coverage, helping it gain legitimacy as an investment vehicle.
The cryptocurrency struggled throughout 2018 but regained strength in November and ended the year above $10,000. It remained volatile, however, and in 2019 was mostly range-bound. Investors are now awaiting a more sustained rise based on fundamental factors like increased acceptance and further developments in blockchain technology. Eventually, some experts say, Bitcoin could become the world’s universal currency, replacing national and local currencies. But so far, the digital currency is primarily used as an investment and a way to transfer money. It’s not yet widely accepted by businesses for transactions. However, Those who accept it typically charge lower fees than they would for traditional currencies. This is partly because they don’t have to pay for the expensive infrastructure that traditional banks require. In addition, bitcoin can be used to purchase goods and services in countries that do not have their currencies. This has made it popular among people who travel abroad.
