Reasons why Bitcoin surpassed its historical peak

According to data from CoinMarketCap , Bitcoin price is trading around 73,200 USD/BTC, down slightly from the peak of more than 73,500 USD recorded not long ago. However, compared to the beginning of this year, Bitcoin price still recorded a 70% increase and achieved 329% performance compared to the beginning of 2023, a period when the cryptocurrency market fell into a series of events.

With the current market price, Bitcoin's capitalization has exceeded 1,400 billion USD, accounting for more than half of the size of the entire cryptocurrency market. Trading liquidity since the beginning of this week has also continuously maintained at a high level, fluctuating between 50-60 billion USD/day.

2 driving forces for Bitcoin to 'fly high'

Commenting on the driving force behind Bitcoin price, Mr. Truong Gia Tue, analyst at New World Education Institute, said that the US Securities and Exchange Commission (SEC) approval of Bitcoin ETFs has had a significant impact. to the evolution of cryptocurrency.

The introduction of spot ETFs means institutions will need to buy more Bitcoin to support the fund's cash flow. Since the Bitcoin ETF was approved, the price of Bitcoin has increased about 55% year to date.

Commenting further on the US regulatory agency's move, Mr. Nhat Hoai, an analyst at New World Education, said that the SEC's approval will legalize an asset class that has many prejudices about stability and stability. trust.

"Bitcoin ETF will become a gateway for individuals and institutions to invest in Bitcoin in a simpler way. Investment funds/banks can now allocate capital to Bitcoin as part of their portfolio. Version Even retail investors can feel secure pouring money into Bitcoin legally," Mr. Hoai commented.

In fact, Bitcoin is an asset that only appeared in 2009 and began to be widely traded since 2010. Therefore, the price action of this cryptocurrency is largely based on the laws of supply and demand and forecasting. The direction of travel is not easy.

However, Bitcoin's current price increase is considered sustainable by experts thanks to the SEC's open signal with the Bitcoin ETF.

Another event coming up over the next 30 days that also deserves attention is the Bitcoin halving. This is an event that marks the doubling of Bitcoin mining difficulty, meaning the mining output at the same time will be halved.

This mechanism would support Bitcoin's scarcity and make mining expensive. Historically, Bitcoin prices have recorded strong increases after the three previous halvings.

Be careful of the FOMO trap

In the context of Bitcoin price surpassing historical peaks, according to Forbes , no one knows for sure how Bitcoin may increase or decrease in the future. However, one way to predict Bitcoin changes is to look at previous volatility.

In January 2014, each Bitcoin only cost about 800 USD. However, after a decade, Bitcoin's value has reached 42,000 USD, an increase of 5,150%, equivalent to an average annual performance of 135%.

If calculated according to this performance, Bitcoin price could reach a minimum of 98,700 USD in January 2025 and 100,000 USD in February of the same year.

Some experts even believe that Bitcoin's market price could increase even faster. 'We estimate the price of Bitcoin will increase 2-4 times within the next 12 months,' said Frank Holmes, President of data analysis company HIVE Digital Technologies.

Or Mr. Matt Hougan - Investment Director of Bitwise - also predicted that Bitcoin could increase in price sharply this year. 'We think Bitcoin is in a multi-year growth wave,' he said.

However, not every year Bitcoin's price growth performance reaches 135%. The cryptocurrency market in reality is always highly volatile and has lost trillions of dollars in capitalization when faced with an incident.

Mr. Truong Gia Tue recommends that investors should be cautious about the market's FOMO mentality when trading Bitcoin or the crypto market at the present time.

Alternative.me 's data also shows that investor sentiment is at an "extremely greedy" level and is about to reach its peak recorded in early 2021.

Compared to traditional markets such as gold or stocks, cryptocurrency is still a risky investment channel

Mr. Truong Gia Tue, analyst from New World Education Institute

'In the cryptocurrency market in general, Bitcoin is considered a safe investment channel because of its large capitalization and is the leader of the whole market. However, compared to traditional markets such as gold or stocks, cryptocurrency is still a risky investment channel,' Mr. Tue noted.

Bitcoin's own daily fluctuations can fluctuate by 5-10% while other cryptocurrencies can witness much higher amplitudes. Therefore, investors should balance their investment portfolio, only spending 5-10% of assets for risky investment portfolio.

The expert also noted that currently, Vietnam has not yet recognized Bitcoin as a legal investment channel. Therefore, investors will not be protected if legal risks or losses arise.

According to Mr. Nhat Hoai, Bitcoin has the highest volatility in the financial market, the profits are high but the level of damage is equally high. Besides, the crypto market in Vietnam is still full of pitfalls such as scams and fake news. Investors without knowledge and self-protection will face great risks.

Lesley Montoya

Update 04 April 2024