In just two years, Bitcoin crosses the US$1 trillion market cap, an incredible milestone.
The market capitalization of Bitcoin, the biggest and most well-known cryptocurrency in the world, crossed US$1 trillion in late 2021, marking a significant milestone. According to Coin Metrics, the digital asset surged 4% from the previous day to reach a more than two-year high of US$52,079.00.
The increasing popularity of bitcoin exchange-traded funds (ETFs) in the United States, the expectation of the impending halving event, and the upbeat mood in the cryptocurrency community all contributed to bitcoin’s remarkable rise. Exchange-traded funds (ETFs) that follow the price of bitcoin provide investors exposure to the virtual currency without requiring them to purchase or hold it themselves. Invest in real bitcoin as opposed to futures contracts, was approved by the U.S. Securities and Exchange Commission (SEC) in January 2024. Following that, several more bitcoin ETFs have been introduced or submitted for approval, bringing in billions of dollars and increasing interest in bitcoin.
The anticipated April 2024 halving event is another element that may affect the price of Bitcoin. The halving procedure lowers by 50% the quantity of fresh bitcoin generated and paid to miners every ten minutes. This implies that while demand may rise and the quantity of new bitcoin would decline, a scarcity effect might raise the price. The halving takes place every 210,000 blocks or about every four years, and in the past, it has been linked to notable price increases in the months leading up to and following the event. In May 2020, the block reward was halved again, going from 12.5 bitcoin to 6.25 bitcoin.
The recent spike in the price of Bitcoin is indicative of the general excitement and creativity in the cryptocurrency space, as more institutions, investors, and regulators see the potential of digital assets. With a market share of more than 60% and a network effect that draws additional users and developers, Bitcoin is typically recognized as the industry pioneer and leader. Due to its restricted 21-million-coin production and decentralized structure, which protects it from government intervention, Bitcoin is also viewed as a hedge against inflation and currency depreciation. Bitcoin’s technological advantages such as its scalability and interoperability solutions, environmental efforts, and rapid, secure, and affordable transactions also provide support to the platform.
Bitcoin does, however, come with dangers and problems, including market volatility, security concerns, regulatory uncertainty, and competition from other cryptocurrencies. The laws and policies of many jurisdictions continue to apply to Bitcoin, which may have an impact on its acceptance, taxation, and legality. In addition, Bitcoin is susceptible to theft, hacking, and cyberattacks, which might lead to the loss or compromise of user assets and data. Additionally, the notoriously volatile price of bitcoin may discourage certain users and investors from joining or remaining in the market. Other cryptocurrencies like Ethereum, which provide greater functionality, diversity, and innovation than Bitcoin, are another threat to the cryptocurrency market.
It is therefore not assured that Bitcoin will retain or grow in value in the future, even though it has accomplished a great achievement by achieving a US$1 trillion market valuation. The future price of bitcoin is dependent on several variables, including how the halving event turns out, how well bitcoin ETFs perform, how the market as a whole feels about cryptocurrencies, and how the crypto sector develops and innovates. Given its advantages over other cryptocurrencies and conventional assets, as well as the increasing interest in and understanding of its potential, Bitcoin may gain. But other risks and uncertainties might restrict or even reverse Bitcoin’s potential for development.
