Why is the Crypto Market on a Surge? -

Why is the Crypto Market on a Surge? If you have been following news surrounding Bitcoin and the entire cryptocurrency market, you will have heard of the ongoing boom. Bitcoin is at the cornerstone of all this as it’s the biggest cryptocurrency, and it has reached an all-time high after the previous one set in November 2021. The cryptocurrency’s former high was 69K USD, and it plummeted to 16k USD in 2022 after the fall of crypto exchange FTX.

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The coin then recovered steadily until $39k USD in January 2024, from where it climbed to a new all-time high of 73k within two months. And while this corrected slightly, it has climbed back up to over 70k.

The current crypto market surge is what is known as a bear market, and it has been brought about by several factors.

The approval for Bitcoin ETFs

One of the biggest catalysts of this surge has been the approval of Bitcoin Spot Exchange Traded Funds (ETFs) by the US Securities and Exchange Commission. This is a move that the crypto community has anticipated for about 3 years now, since when ETFs based on futures products were approved by the SEC in 2021.

First, ETFs are a form of investment fund that buys a commodity such as stocks, and other people can now purchase shares of the ETF instead of the actual stocks, bonds, or commodities. In the case of Bitcoin, Bitcoin ETFs buy the cryptocurrency directly or track its price using futures contracts or other financial instruments.

Instead of buying Bitcoin directly, users can then buy Bitcoin ETF shares on regular stock exchanges and still benefit from the price increases of Bitcoin. These vehicles therefore make it easy for traditional investors and the mainstream market to get into the crypto world without having to worry about Bitcoin wallets and other complexities.

The first Bitcoin ETF was approved in January 2024, and this has been a welcome addition to the crypto community. These ETFs are now helping more people bring funds into Bitcoin to drive the price higher as well as reduce volatility – institutional investors don’t cash out every now and then.

The 2024 Bitcoin Halving Event

Another significant factor contributing to the current bull market is the 2024 halving event, which is expected to take place on April 20, 2024. A halving event is quite significant to Bitcoin as it’s an inbuilt mechanism meant to protect the value of the cryptocurrency, and it has been happening approximately every four years since 2008.

During a Bitcoin halving event, the mechanism controlling the blockchain reduces the number of bitcoins entering circulation every ten minutes by half. In 2024, this number will change from 6.25 to 3.125 BTC.

The implications of this change are quite significant. The first one is that the reduced supply will lead to a potential increase in price. This has been the case during the previous halving events, which took place in 2012, 2016, and 2020.

In the first halving event, the price for successfully mining a Bitcoin block was reduced from 50 BTC to 25 BTC. At the time of halving, the BTC price was $13 (where were you, LOL :-)) and it peaked at $1,152 in the following year. In 2016, it went from $664 at the time of halving up to $17,760. The third halving then reduced the reward from 12.5 BTC to 6.25 BTC, pumping the price from $9,734 to the all-time high of 69,000 in 2021. However, this was also fueled by other factors, such as Coinbase, a crypto exchange, going public.

In the case of the 2024 halving event, the price went up before the supply was even reduced. Alongside other factors, this can be attributed to the fact that investors expect the Bitcoin halving event will drive prices to new levels.

Favorable Regulatory Developments

One of the biggest risks of the cryptocurrency world is that it is heavily affected by regulatory decisions. For example, if a government introduces unfavorable laws, investor confidence usually goes down, leading to many people cashing out their assets.

However, the opposite has been happening in the recent past. Besides the approval of ETFs, an important one is the Markets in Crypto-Assets (MiCA) bill which has passed all the voting stages in the European Parliament and is set to become law in 2024. The bill is aimed at harmonizing the regulatory framework for crypto assets in the EU, and it shows that the union is embracing digital currencies.

In the same spirit, the UK government has expressed intentions to make crypto assets a regulated financial instrument. Its financial regulator recently announced that it will permit recognized investment exchanges to introduce crypto-backed exchange-traded notes (cETNs). It also previously stated that it would regulate stablecoins, with the legislation coming in 2024.

These are not isolated cases but just a highlight of what is going on. Governments all over the world are universally embracing crypto assets to avoid being left behind. And when such regulations are announced, they only boost investor confidence and drive prices up, as we’ve seen in 2024.

The Pros and Cons of Investing in Bitcoin in April 2024

Pros of Investing in Bitcoin in April 2024

1. Potential for High Returns

Bitcoin has shown incredible growth potential in the past, with some investors seeing massive returns on their investments.
As adoption increases and more mainstream institutions embrace Bitcoin, the potential for high returns remains promising.

2. Diversification of Portfolio

Investing in Bitcoin can provide diversification to a traditional investment portfolio, offering exposure to a non-correlated asset class.
Diversification is essential for reducing risk and increasing overall portfolio resilience.

3. Hedge Against Inflation

With central banks around the world printing money at unprecedented rates, Bitcoin’s limited supply offers a hedge against inflation.
Unlike fiat currencies, Bitcoin has a capped supply of 21 million coins, making it a deflationary asset.

Cons of Investing in Bitcoin in April 2024

1. Volatility

Bitcoin is infamous for its price volatility, with sharp fluctuations in value occurring frequently.
nvestors must be prepared for significant price swings that can test their risk tolerance.

2. Regulatory Uncertainty

The regulatory landscape surrounding Bitcoin is constantly evolving, with governments worldwide grappling with how to classify and regulate cryptocurrencies.
Regulatory changes can have a profound impact on the value and adoption of Bitcoin.

3. Security Risks

Holding Bitcoin requires a secure storage solution to protect against hacking and theft.
Without proper security measures in place, investors risk losing their assets to malicious actors.

Frequently Asked Questions

Why is crypto surging right now?

The surge can be attributed to a flood of cash into new spot bitcoin exchange-traded funds as well as the Bitcoin halving event.

What is the best cryptocurrency to invest in today?

Bitcoin is still the best cryptocurrency to invest in due to its relative stability and consistent price increases.

How can I buy Bitcoin?

You can buy Bitcoin by creating an exchange account, such as Binance or Coinbase. You can then purchase USDT through the peer-to-peer marketplace and convert it to Bitcoin when you feel the price is right.