For all those who lost hope that the cryptocurrency market would ever crawl out of the abyss it’s been thrown into by the latest crypto winter, we’ve got some really great news: Bitcoin is back above the $60K threshold for the first time since the 2021 crypto boom and Ethereum, the second largest crypto in the market, is following closely in its footsteps, topping the $3K milestone and moving towards new resistance levels.
Does this mean that now might be a good time for investors to supplement their Bitcoin holdings or buy Ethereum p2p for portfolio diversification? Experts are still cautious about casting predictions and making recommendations in this respect, but it’s obvious that these developments have flooded the market with a new wave of optimism and hope.
As expected, the price uptick experienced by the two leading coins reverberated throughout the entire market and put all other digital assets into an ascending motion. Price charts show a strong performance for major coins like Cardano (ADA), Solana (SOL) and Dogecoin (DOGE), and an 8.9% increase in the global cryptocurrency market, bringing it to a total of nearly $2.3 trillion.
By the looks of it, 2024 could be the year that crypto assets hit new record highs, but one can’t dismiss the possibility of a price correction either, so let’s take a look at how things have unfolded so far and the factors behind recent trends.
The halving narrative
On February 28, Bitcoin suddenly spiked to a yearly high of little over $63,000, just a few short strides away from it all-time high of $68,789 registered in November 2021. Unfortunately, shortly after breaking above $63K, the leading coin fell below the $60K level following reports of outages and errors on the Coinbase platform causing some users to experience issues logging in or see a $0 balance in their accounts.
Official representatives were quick to address the incident and explain that the errors were due to increased traffic, reassuring users that their assets were safe and activity on the platform would quickly go back to normal. This helped calm the spirits and the asset rose back above $60K, currently trading at $62,777.
Bitcoin’s price rise might be stunning to some, but certain pundits believe it makes perfect sense since it correlates with the looming halving event. The halving is a predetermined feature written into Bitcoin’s code which implies slashing the reward for mining new blocks in half every 210,000 blocks, usually amounting to 4 years. Although this reward reduction is making it harder for miners to earn new coins, it represents a viable solution for controlling the circulating Bitcoin supply and avoiding inflation.
But what’s most interesting about the halving is the influence it has on Bitcoin’s price performance. The past three halvings that have occurred over its 15-year history have shown that Bitcoin follows a four-year cycle, entering an appreciation trend in the months leading up to the halving event and going on a major bull run over the following months.
Although past performance is not necessarily indicative of future performance, Bitcoin’s recent behavior seems to suggest that the upcoming halving which is expected to take place in April could once again put wind in Bitcoin’s sails and propel the assets to unprecedented scores.
Other factors fueling Bitcoin’s rise
While it may be expected of Bitcoin to appreciate ahead of the halving, the recent price rally gives reasons to believe that the crypto king could start its bull run much earlier than anticipated and peak before the end of the year. Although these predictions might sound overly optimistic, we shouldn’t overlook the other factors that have likely contributed to Bitcoin’s rise.
The approval of the first spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission on January 10 has served as a catalyst for Bitcoin’s recovery, sparking excitement in the cryptocurrency market. These funds provide greater exposure to the leading asset for institutional investors who were often reluctant to include digital currencies in their holdings. The increasing number of investors pouring their money into Bitcoin not only drives prices up but also enhances the assets’ legitimacy and credibility as an investment venue, bolstering its standing in the financial market.
Another aspect that one needs to factor in when analyzing Bitcoin’s rising trajectory is the shift in retail investors’ attitudes towards Bitcoin and crypto in general. While previous price upticks were largely driven by speculative bubbles, this time retail investors seem to take a much more cautious and calculated approach to crypto investing. Their decisions are based on a better understanding of the crypto market and the ongoing rise in institutional interest which has boosted confidence in the market.
With Bitcoin back in the game, other coins are also benefiting from the general enthusiasm pervading the crypto industry, and Ethereum is enjoying its fair share of attention. While Bitcoin was ticking new milestones in its ascension, Ethereum also experienced a similar trajectory. The altcoin leader consolidated its position above the $3K resistance level and was trading at $3,464 at the time of writing, which puts it within short distance of its former high of $ 4,891.
Moreover, Ethereum’s Dencun upgrade scheduled to take place in March, is expected to reduce transaction costs and improve the network’s performance and scaling capabilities. This will increase the altcoin’s appeal to retail and institutional investors and drive its price up.
Towards greater heights
If you ever doubted crypto’s resilience and ability to recover, this year’s performance will probably make you change your mind. With Bitcoin and Ethereum taking big leaps toward new records, we could be just a few months away from the biggest bull market crypto has ever experienced. So, keep your eyes and ears open and buckle up for another interesting chapter in crypto’s history.