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Bitcoin is back trading below $23,000 after hovering there for a while. The token’s unreliability and volatile performance put investors in a difficult position to predict its immediate future. Here’s a closer look at what happened with the leading cryptocurrency.
Powell saves bitcoin from falling
The Chairman of the Federal Reserve, Jerome Powell recently made remarks saying that the Fed is still trying to control inflation and that the process of deinflation is in its early stages. This offered some reassurance to investors since news of the US unemployment report a week ago caused serious jitters in the market, sending cryptocurrency prices lower.
He added that if there is a decrease in the number mentioned in the inflation reports, or if the labor markets continue to be strong; The Federal Reserve may have reason to raise interest rates further. However, the cleansing process will not be quick nor less painful. There is a possibility of reversal of interest rates at the terminal level.
In the context of pushing the same expectations, Naeem Aslam said that it is no longer possible to expect interest rates to remain between 4.75-5%. Naeem is the chief market analyst at AvaTrade, and believes interest rates could go up to 5.25%. However, these comments were met with some criticism from Michael Hewson, Director of Analysis at CMC Markets.
Apart from this, other factors such as the sale of Grayscale, the largest Bitcoin fund in the world, have caused some upset when it comes to confidence in Bitcoin. From the looks of it, it seems like Bitcoin’s price behavior is just based on the headlines at the moment. A closer look at Bitcoin’s price performance so far, since its inception, will help to understand how the currency will perform in the future.
The rise and fall of bitcoin throughout history
The rise of Bitcoin, starting with its inception in 2008, has been nothing short of spectacular. The idea of a decentralized digital currency based on blockchain technology was presented by pseudonymous Satoshi Nakamoto in a white paper. And on January 3, 2009, the Bitcoin network began to operate with the mining of the genesis block, which marked the beginning of the blockchain.
The block contained a note that referred to the financial crisis of 2008-2009, hinting at why Bitcoin was created – as a reaction to the way the events of those years played out.
In 2011, Bitcoin experienced its first major price surge, rising from $0.30 to $30 but falling below $5 by the end of the year. The reason for this is unknown, but competition from other cryptocurrencies may have played a role. In 2012, the first Bitcoin halving took place, which reduced the mining reward and paved the way for future growth.
2013 saw the biggest gains in Bitcoin price history with an increase of 6,600%, reaching a peak of $1,100 and surpassing the $1 billion market cap. This has been accompanied by an increase in interest in cryptocurrencies, including the emergence of Dogecoin.
From 2014 to 2016, while the crypto industry continued to grow with technological innovations such as proof-of-stake and smart contracts, bitcoin remained relatively quiet. The price has been holding steady in the $200 to $400 range for most of this time, but started to climb with the second half of 2016, reaching five figures during the year, peaking at nearly $20,000 in December of 2017.
In 2020, the third halving occurred, reducing the mining reward from 12.5 coins to 6.25 coins. The bitcoin price saw an increase from around $7,000 in March to over $40,000 in December, driven in part by institutional investors and growing adoption by businesses and corporations.
The year was marked by increased regulation, as governments and central banks around the world took a closer look at cryptocurrencies. Despite this, the price of bitcoin has remained volatile, with fluctuations throughout the year.
Bitcoin’s rise, from its inception in 2008 to the present day, has been marked by volatile price movements and increased public awareness and interest. Despite the challenges and ups and downs, the cryptocurrency continues to grow and mature, with increasing adoption and investment from institutions and companies. The future of Bitcoin and the crypto industry is still uncertain, but one thing is certain – it has come a long way since its early days and has the potential to reshape the world of finance.
Will Bitcoin rise again?
Investors and market analysts are divided on the future of Bitcoin, at least in the short term. A positive outlook for bitcoin for the next few months points to an uptrend as many investors believe that the token found a bottom at the $17,000 price level in December. This is a huge determinant of a token’s price if macroeconomic conditions are not taken into account.
However, on a longer time scale, a host of other factors come into play. Bitcoin halving, the event in which the mining reward is halved, is expected to take place next year, and the price is expected to increase due to the deflationary trend and the limited supply of bitcoin.
Crypto whales, which are known to make bulk purchases, seem to have accumulated bitcoin over the past few weeks. While institutional investors have a bearish view of the cryptocurrency. Many are expecting the coin to drop below the $20,000 level, while a few investors come with extreme expectations for the coin, taking it to $12,000.
Rising interest rates may encourage token pumping, as it is one of the best digital assets to fight inflation. However, in times of such market volatility, investors prefer to avoid risky assets and opt for safer options, at the expense of potentially higher returns.
In the short term, bitcoin is expected to return to the $24,000 level. As there has been a huge spike in the number of Bitcoin micro-wallets, which indicates that investors are preparing to accumulate the coin.
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