Bitcoin, the cryptocurrency synonymous with startup wealth, valuation roller coasters, and massive fraud, hit an all-time high on Tuesday, surpassing $69,000, its highest since November 2021. has been updated. This rally has pushed Bitcoin's price up more than 300% from its lows. A little over a year ago, it was just under $17,000.
The remarkable rise to new heights from the stunning market collapse appears to be driven by several factors, including increased support from Wall Street brokerages and concerns about the economy as a whole.
That doesn't change the fact that cryptocurrencies are risky investments. If you plan on giving Bitcoin a try, CNET recommends investing up to 5% of your portfolio. And be prepared to lose everything. Don't invest before paying off high-interest credit card debt or building an emergency fund.
“People essentially need to treat it like gambling,” Janese Torres said. His podcast “Yo Quiero Dinero” focuses on personal finance and also discusses crypto investing. “I use 'investment' in quotation marks because I want to start the whole conversation by saying that this is a highly speculative investment. ”
Still, while Torres has money invested in cryptocurrencies, it's less than 1% of her overall portfolio. “Never invest your emergency fund thinking you'll get a windfall,” she says. “That's very dangerous.”
What is causing this surge?
The global cryptocurrency market is huge, with over $2.5 trillion in reported assets, according to industry watcher coinmarketcap.com. Hundreds of billions of dollars of transactions flow through the system every day. That said, several factors may be at play in this recent surge in value.
ETF mania grabs virtual currency
One of the biggest catalysts for the rise in Bitcoin prices appears to have occurred in January, when Wall Street investors were given a new way to invest in cryptocurrencies through exchange-traded funds (ETFs). Think of them as mutual funds that invest in a variety of crypto-related assets.
The U.S. Securities and Exchange Commission approved the first Bitcoin-related ETF in 2021, at a time when crypto enthusiasts seemed to be everywhere. But that ETF was a strange financial product and not a true investment.
In January, the SEC approved for the first time a new group of Bitcoin ETFs that will allow investors to buy Bitcoin as easily as stocks or mutual funds.
As the Wall Street Journal explained when the ETF was approved, to date, everyday investors who want to buy cryptocurrencies have had to either trade on expensive crypto exchanges or invest in volatile financial instruments. There was a need. The industry hailed the decision as a “game changer,” and sure enough, Bitcoin has soared more than 50% since then, according to the paper.
money and economy
Another interesting data point about this crypto rally is that the value of gold has also increased to an all-time high. Reuters market watchers say investors are buying up gold on the back of weak U.S. economic data, concerns about a stock market correction and expectations for interest rate changes.
Bitcoin crashes, rises, crashes again, rises again
An important part of Bitcoin's history is how often it has gone up and down over the years. It's often called a roller coaster, and for good reason.
Over the past four years, the price of Bitcoin has doubled, halved, more than doubled, and more than halved. Bitcoin's value jumped from less than $20,000 at the end of 2020 to more than $67,000 at the end of 2021. In June 2022, it plummeted below $18,000. It is currently trading near all-time highs.
The recent crash, known as the “crypto winter,” has also exposed high-profile scams worth billions of dollars, including one involving trading platform FTX, which at one point was $8 billion short of funds.
Additionally, within the next few months, Bitcoin is expected to undergo a “halving,'' which occurs approximately every four years. This could reduce the supply of newly created Bitcoins, causing prices to rise, CNBC reported.
please be careful
There is no doubt about it, the world of Bitcoin investing is full of scams and conspiracies and is extremely volatile.
CoinMarketCap offers a data point on its website called the Fear and Greed Index that attempts to track the emotional state of investors using cryptocurrency prices and user behavior. Currently, CoinMarketCap states that its index is leaning toward “extreme greed.”
If you still want to invest, CNET has plenty of resources to help you get started. But consider yourself warned.
