Bitcoin price hike driven by scandal and central bank plans
Bitcoin’s Surging Fortunes Amid Industry Turbulence
Bitcoin exceeding the $40,000 mark is because, not despite, the recent scandals are removing the bad actors from the market.
On Monday, the world’s largest crypto hit a high of $41,700, a level not seen since April 2022. On Tuesday, Bitcoin reached $44,011, according to Cointelegraph Markets Pro and TradingView data. This takes BTC’s week-to-date gains to 10%.
In November, Binance founder Changpeng Zhao, better known as CZ, pleaded guilty to money laundering violations and agreed to pay a fine of $50 million and step down as the exchange’s CEO.
The company also pleaded guilty and agreed to pay $4.3 billion in fines and restitution to the government, say federal authorities.
As I was quoted by Yahoo News, Forbes, The Times, Advisorpedia, Pound Sterling Live, Mena FN, IOL, Market Forces Africa, and Tech.eu, amongst other media, a degree of short-term volatility stemmed from the CZ/Binance scandal and the collapse of FTX which resulted in a month-long trial convicting the FTX founder Sam Bankman-Fried of seven counts of fraud and conspiracy. However, the cryptocurrency market has remained bullish.
In fact, BTC is up by more than 150% so far this year.
Scandal-driven crackdowns fuel investors
It seems as though global law enforcement and regulatory authorities are cracking down on digital currency executives and companies. This greater regulatory scrutiny looks to be appealing to investors who are piling into Bitcoin and other cryptocurrencies.
In addition, it would also be attractive to institutional investors who bring massive amounts of capital with them.
Software developer and the largest corporate holder of Bitcoin, Microstrategy, recently boosted its holdings, buying around 16,130 BTC, worth around $610 million at current prices.
Furthermore, BlackRock, the $9trillion asset manager, alongside WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise and Valkyrie Digital Assets, have published Bitcoin ETF applications which are awaiting approval by the US Securities and Exchange Commission, the SEC.
We believe Bitcoin ETFs are an imminent inevitability, which would help to drive crypto prices and mass adoption.
Should the SEC approval go ahead, it would be a landmark for BTC. This approval would show how BTC is unquestionably part of the global mainstream financial system.
Spot ETFs invest directly in underlying assets, typically stocks or bonds, at the current market price (spot price). They aim to replicate the performance of a specific index or asset class by holding a portfolio of the actual securities that make up the index.
Moreover, forecasts the Federal Reserve and other major central banks around the world have completed their rate hiking cycle are fuelling Bitcoin prices.
Supply Constraints, Halving Expectations, and Market Dynamics
Not forgetting the upcoming halving event in 2024. One of the principal features of Bitcoin’s monetary policy is its limited supply. Indeed, the system caps the total number of Bitcoins that can ever exist at 21 million coins.
BTC’s issuance is also predictable. The mining process creates and adds new Bitcoins to the circulating supply.
That said, the rate of issuance is set to decline over time. At the beginning, miners received 50 Bitcoins for each successfully mined block. The reward halves approximately every four years during the so-called halving event.
The next halving is forecasted for April next year. The lead-up has typically been the most profitable time for cryptocurrency investors.
Consequently, scandal-triggered crackdowns, forecast moves by central banks, and the 2024 halving event are driving Bitcoin prices, and we expect this trend to continue for the rest of this year and into the next.
Read my previous blog post here