Bitcoin soars to record high, stoking speculation and caution alike
What's behind the price increase of the most popular virtual currency? It's mainly the influx of funds into ETFs specializing in cryptocurrencies trading, and the anticipation of interest rate cuts by the Federal Reserve.
Bitcoin has been appreciating rapidly in recent days. Just a week ago, it crossed the £51,500 mark.
Is Bitcoin on its way to £79,000?
According to some analysts, Bitcoin's price is currently in a long-term upward trend, and the next significant resistance could be at the £79,000 level. Additional support for the prices will be the planned "halving" in April, which is the halving of the block mining reward in the Bitcoin network.
In short, this process involves the mining block reward (i.e., the amount of new Bitcoins awarded to miners for solving a mathematical problem) being reduced by half.
As Konrad Ogrodowicz, a fund manager at Superfund TFI, explains in the Parkiet, "this means that the supply of Bitcoin will drop by half." "This is undoubtedly a positive phenomenon and has always signaled a bull market in the past," he explained.
The cryptocurrency market is characterized by great uncertainty
Despite the enthusiasm related to recent increases, some market participants caution against excessive euphoria. They remind that cryptocurrencies are speculative assets, characterized by very high volatility in prices.
Investing in Bitcoin or other cryptocurrencies requires an awareness of the risk. Sharp increases in price can just as quickly turn into a deep correction. Therefore, the key issue is the appropriate diversification of the investment portfolio.
Bitcoin is a decentralized digital currency. It relies on blockchain technology, a public ledger of distributed records. The maximum supply of bitcoins is 21 million, of which over 18 million have already been mined.
