For the past few years, the narrative surrounding crypto assets leaned on the negative side, given the devastating effects that the most recent crypto winter had on the market, with high-profile bankruptcies, scandals and prices dropping across the board. Many worried that this would be the crypto winter to end all crypto winters and that the industry would never be able to recover from the dramatic events it had experienced. The bleakest of predictions saw digital assets slowly fade into obscurity with time.
But that was then and this is now. Two years after the terrible events we’ve mentioned, the crypto landscape looks drastically different in a good way. Once again, crypto skeptics have been proven wrong seeing that the market is neither dead nor dying. In fact, it’s well past the point of recovery as it stepping into a new era of prosperity with Bitcoin, the asset that kicked off the crypto craze, leading the way. The trailblazing crypto’s price rally is sparking renewed interest in cryptocurrency investing, flipping the script from losses to profits. This is great news for those who have accumulated Bitcoin when prices were low but also for those looking to buy Bitcoin online for investment purposes.
Bitcoin’s record-breaking figures
Recently, the crypto king managed to surpass its former peak of $68,789 reached on November 2021, rising to a new record of $69,170. This was a long time coming for the asset which had a lot of ground to recover after losing 64% of its value in 2022, in the midst of the bear market.
Unsurprisingly, the coin fell more than 10% immediately after the surge, as it often happens following a sudden uptick, but then got back on an ascending trend and settled around the $66K price point.
The factors influencing crypto prices are multiple and varied, but in this particular case, there are two aspects that analysts believe have served as the main drivers for Bitcoin’s rise. The first is the much-anticipated approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission. The process has been long and strenuous, stretching over several years, with asset management firms applying for spot Bitcoin ETFs repeatedly and the SEC rejecting their applications on the grounds of fraud and market manipulation risks.
It wasn’t until a federal appeals court found the SEC’s rejections unfounded that the regulator finally conceded to applicants’ requests and gave the green light for the launch of 11 spot Bitcoin ETFs. This long resistance only amplified the importance and significance of the moment, prompting many analysts to declare the approval a historical milestone for the crypto industry.
Although it’s difficult to gauge the long-term effects that spot Bitcoin ETFs might have on the market, their emergence is expected to lead to increased institutional participation considering these funds provide a simple and safe way for institutional investors to get direct exposure to Bitcoin’s live price without owning the asset directly. So far, spot Bitcoin ETFs have recorded a combined inflow of over $562 million. With more money from traditional institutions being poured into Bitcoin, the coin’s legitimacy and value are bound to increase.
The fast-approaching halving is the other notable event that is stirring crypto market excitement and fueling Bitcoin’s appreciation trend. The halving is a mechanism built into Bitcoin’s code and occurs automatically every 210,000, slashing the reward for validating transactions and adding new blocks to the blockchain in half. Therefore, this key feature helps curb inflation and keep demand and prices up. Bitcoin’s price history shows a pattern of sharp rises following each halving, so its value is expected to increase further after the halving event in April.
Bitcoin holders are counting their blessings
Apart from the renewed crypto euphoria, Bitcoin’s rally to $69K also put 100% of Bitcoin addresses in profit, according to data provided by on-chain analytics platform IntoTheBlock. This percentage obviously changed as Bitcoin’s price dropped, but the performance remains remarkable nonetheless.
Over the past two years, traders and investors had the opportunity to purchase Bitcoin at a much lower price than its current value, a strategy known as buying the dip. This means most of them acquired Bitcoin below $68,000. Now that the asset’s market value is going up, these addresses are reaping the rewards of their earlier investments and calculating their gains.
The fact that a large number of crypto holders are in the money has positive implications for the market. Seeing that Bitcoin investments are profitable again will likely cause selling pressure to ease off. New investors are also expected to enter the market, which will potentially push Bitcoin’s price higher and turn speculations of a new bull run into a reality.
However, one shouldn’t get too carried away by these striking figures without doing further research. For a more balanced view of Bitcoin’s profitability, it’s important to understand the context and take a closer look at the details. These recent statistics rely on the assumption that the majority of addresses purchased Bitcoin at significantly lower prices, disregarding the fact that many investors supplemented their holdings at different price points. This means that not all crypto holders are basking in large profits, as some headlines would have one believe.
As impressive and heady as Bitcoin’s revival may be, it’s crucial to maintain a realistic perspective on the market and crypto’s investment potential. Although most digital assets are in the green right now and the promise of large returns is bolstered by predictions of a new bull run on the horizon, one needs to remember that cryptocurrencies continue to be highly volatile and therefore risky. So, making informed and calculated decisions is paramount when investing in Bitcoin or any other digital asset.
