Is Bitcoin Going To Keep Going Up

Cryptocurrency is volatile, with a track record of
“boom and bosom“
cycles that have left many wondering whether information technology’due south safe to invest.

The price of bitcoin, the near popular cryptocurrency, dropped below $16,000 again in Nov, a year after it reached a tape high of $69,000 in Nov 2021. It’southward currently worth more than $17,000.

With the digital currency on a downwards trajectory, what’s fuelling it?

In this article nosotros explain:

• What is happening to the value of bitcoin and why
• Why is bitcoin so volatile?
• Has bitcoin’s bubble flare-up?
• Will bitcoin recover?
• If bitcoin will become up if the stock market crashes

What is happening to the value of bitcoin and why?

Bitcoin is incredibly volatile. It is prone to rising and falling sharply on a daily ground. But it’s not the only cryptocurrency to have had a tumultuous time recently.

Global stocks have gone into a downturn as issue of:

• The war in Ukraine
• Inflationary fears
• Higher interest rates, which volition make information technology more expensive for businesses to borrow money

This has spilled over into the cryptocurrency marketplace.

The electric current slump in November 2022 has been triggered past the collapse of FTX, which handled around $1 billion transactions each day. Its collapse is having a knock-on issue on other crypto exchanges.

In June 2022 bitcoin dropped below $xx,000 for the commencement time since 2020. This was prompted by the decision of Celsius Network, a major U.s. cryptocurrency lending company, to freeze withdrawals and transfers, citing “extreme” weather.

The movement fuelled a slump across the cryptocurrency market.

China’s continued crackdown on crypto is playing a part too. And there has also been speculation that crypto operations could come up to a halt in Russia.

In add-on to this, in that location have been sudden and severe sell-offs of major cryptocurrencies. This has triggered panic and further sell-offs every bit consumer confidence is knocked.

Why is bitcoin and then volatile?

Unlike traditional investments such as company shares, where price movements may well be influenced by the performance of the business organisation, bitcoin has no underlying asset.

This means that the movements in its toll are based purely on speculation among investors about whether information technology will rise or autumn in future.

Equally a result, there tin exist tearing swings in the price of bitcoin, even in the space of 24 hours.

At the moment, high aggrandizement and a cost of living crisis are causing people to reduce their investment risk by selling their cryptocurrency.

There have also been a number of incidents that have acquired the toll to fluctuate:

Negative stories

A number of negative stories and threats of further regulation have pushed the price of bitcoin down.

These include:

• In November 2022 cryptocurrency commutation FTX went bosom after its rival Binance pulled out of a bargain to buy it
• In June 2022, Celsius Network, a major The states cryptocurrency lending company, froze withdrawals and transfers, citing “farthermost” conditions.
• As well in June 2022, Binance, i of the world’s largest cryptocurrency exchanges, paused bitcoin withdrawals, with main executive Changpeng Zhao blaming a “stuck transaction” that was causing a backlog.
• Early in 2022, it was reported that Russia might ban cryptocurrency operations. But then, after the invasion of Ukraine, there were calls for crypto exchanges to ban Russian transactions.
• In May 2021, Tesla boss Elon Musk said that the electric car maker would no longer be accepting digital payments over concerns about the bear upon of cryptocurrency “mining” – the computing power required to create the likes of bitcoin – on the environment.
• In June 2021, banks and payment institutions in China were told to stop enabling crypto transactions, and the Chinese government banned the mining of the currencies. Then in September 2021, all crypto transactions were declared illegal, in outcome meaning that the likes of bitcoin were banned.
• Also in June 2021, then U.s. president Donald Trump described bitcoin as a “scam” competing against the dollar to exist “the currency of the earth”.
• FBI agents accept seized millions of dollars in bitcoin from criminals down the years.
• In August 2021, UK regulator the Fiscal Conduct Authority in upshot blacklisted Binance, i of the largest crypto exchanges. Big banks such as HSBC and Santander followed suit past blocking customers from making payments to Binance.
• In the same month, the Imf issued a alert on countries using cryptocurrencies as legal tender, saying its widespread utilise would threaten “macroeconomic stability” and could harm financial integrity.
• Crypto heist: last August, a hacker stole $600m in a cyber attack targeting the crypto platform Poly Network, but to render more than half of it four days later saying they did it “for fun” and to “expose the vulnerability” in the system before others did.

Positive stories

But at that place have been more positive stories, and these have given the bitcoin price some protection over the past year:

• In March 2021, Morgan Stanley became the commencement big United states of america bank to offer wealthier clients admission to bitcoin funds – albeit restricted to no more than 2.5% of an investor’southward total internet worth.
• In June 2021, a month after sparking a crypto sell-off, Elon Musk said Tesla would probably accept bitcoin payments again when more l% of its energy usage came from renewable sources.
• Amazon posted a job advert for a “digital currency and blockchain product lead” in July 2021, prompting speculation that it would soon accept bitcoin as payment.
• Last September, El salvador made bitcoin legal tender.

Other stories have been more mixed in terms of what they mean for cryptocurrencies. Among them has been the US Federal Reserve considering whether to launch its own “central bank digital currency” (CBDC).

In March this year, President Joe Biden issued an executive lodge that aims to according the US authorities’south actions on the regulation of digital assets.

While many crypto fans think regulation is a bad affair, some think this new executive social club could help with the evolution of digital assets, such as the CBDC, to ensure the right consumer protections are in identify.

Read our article hither if yous are still wondering whether or not to invest in bitcoin.

Has bitcoin’southward bubble flare-up?

In 2021 the cost soared by more than 700% in 12 months to a record high of $69,000 in Nov

Information technology certainly seems like bitcoin’south bubble has burst as investors have lost confidence in the crypto sector. It is uncertainty over the time to come of bitcoin which has caused prices to crash.

In June 2022, information technology plummeted below $18,000. It was still beneath $xx,000 by November 2022, but a twelvemonth after its tape loftier of $69,000.

When assets rise very apace in toll and surge to a tape high, typically this makes a crash much more likely – or at to the lowest degree a correction, which is when the price falls back downwardly to a more than “normal” level.

This appears to be the situation that bitcoin is in right now. Information technology took the cryptocurrency:

• 11 years from launch to get to $twenty,000 per coin
• But only iii weeks for bitcoin’s cost to double from there

A decisive year for crypto investors was 2013. Bitcoin’s price went from $13.40 at the start of the year to its height in Dec of $1,156.ten, before falling to nearly $760 three days after.

Where information technology is heading next is equally unpredictable.

Check out one Times Money Mentor reader’s crypto experience: “Bitcoin’southward rollercoaster ride has swept me to an £8,500 turn a profit in less than a year”

Will bitcoin go support?

There are no guarantees when information technology comes to investing. Equally quickly as bitcoin falls, information technology could only as rapidly climb again.

There are a number of concerns about cryptocurrencies that are dampening its prospects:

• Cryptocurrency exchanges going bust
• Crackdowns in countries like China
• Calls for greater regulation across the globe
• Environmental concerns
• Security bug and hacks
• Their price is based solely on speculation

Further regulation is seen as a threat to the decentralisation of crypto, which is having an impact on the prices of digital currencies.

Bitcoin’south fans point to its positive qualities:

• Transformative technology that could revolutionise industries
• Simpler and cheaper transactions by cutting out “middle men” such as banks
• Easier global trade because, with a not-fiat digital currency, there would be no concerns well-nigh substitution rates
• Transactions are more than confidential
• Information technology is a  safe store of value because it can’t be printed or seized
• Bitcoin has been touted as an culling to gold, meaning it could prove itself as a hedge confronting inflation

Given its volatile nature, information technology is possible that bitcoin volition gather momentum once again at some indicate in the futurity (perhaps weeks, months or even years downward the line).

But no one has a crystal ball and the speculative nature of bitcoin makes information technology difficult to predict.

Detect out more about the tips (and mistakes to avert) when investing with cryptocurrencies.

Volition bitcoin get upward if the stock market crashes?

Not necessarily. Supporters of bitcoin see it as a diversifier in balanced portfolios, but information technology did no better than stocks at the beginning of the coronavirus pandemic. This is because investors panic-sold everything.

In the first ii weeks of March 2020, bitcoin went downward by more than 40%.

“That was when nosotros saw all equity markets take an aggressive leg downwardly because of concerns almost Covid-19,” notes Rosie Bullard, partner and portfolio manager at James Hambro & Partners. “And so it wasn’t exactly a store of value in an equity market reversal.”

That said, how crypto assets perform during stock market falls will depend on why financial markets accept collapsed.

If it was all nigh an inflationary shock, such equally happened in 1974, about bitcoin investors believe it would provide protection.

If you want to read more about the alternatives to bitcoin, check out our article hither.